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Retirement Basics > DC Plans > Flashcards

DC Plans Flashcards

1
Q

What is DC an acronym for

A

Defined Contribution

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2
Q

What is DB an acronym for?

A

Defined Benefit

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3
Q

What is the acronym for NQDC

A

Non-Qualified Deferred Compensation

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4
Q

What are the 2 types of a Money Purchase Plan

A

Cash Balance and Traditional

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5
Q

What are the types of DC plans

A

Money Purchase, Profit Sharing (traditional), 401(k), ESOP, 403(b), IRA’s

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6
Q

What are the 2 types of Employer After-tax contributions?

A

Voluntary after-tax and Roth After-tax

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7
Q

Employer money will always be what type of money?

A

Pre-tax

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8
Q

What is the main difference between the two After-tax contributions sources?

A

GAINS

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9
Q

What type of tax advantages do employees typically receive by contributing sources?

A

TAX DEFERRED GROWTH OF BOTH CONTRIBUTION AND GAINS

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10
Q

Many employees also call a DB a what?

A

PENSION PLAN

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11
Q

What are they ways you can a participant has a DB plan in P3?

A

The LOB, plan name, balance,( MF,CT,ZZ,AC,GQ) initials in affiliate #

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12
Q

What would you do if a participant called and said they had questions on their DB plans?

A

PROBE AND OR TRANSFER

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13
Q

True or False

An employer can freeze a DC plan and not allow any new employees interesting it

A

TRUE

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14
Q

What type of money may be allowed for employees to contribute in MP and PS plans?

A

VOLUNTARY AFTER-TAX

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15
Q

A 401k is what type of plan?

A

PROFIT SHARING

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16
Q

Which of the following plan types can be Erisa or Non-Erisa plan, and opt out of certain regulations that were established by ERISA legislation?

a. Money Purchase plan
b. Traditional profit Sharing plans
c. 403b plans
d. ESOP plans
e. 401k plans

A

403b

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17
Q

A 401k and 403b plan allows the employee to contribute what type of money and if the plan allows, they may also be able to contribute what type of money?

A

PRE tax, Voluntary after-tax, Roth AT

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18
Q

Which type of plan is a NQDC plan with a twist?

A

Govt 457b

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19
Q

What are the 3 types of IRAs?

A

Traditional, Roth and Auto

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20
Q

Which type of IRA is only AFTER-TAX money?

A

Roth IRA, and roth auto

21
Q

Which type of IRA allows for both pre tax and After-tax contributions?

A

TRADITIONAL IRA AND AUTO TRADITIONAL IRA

22
Q

True or false

There is no employer involvement in a Traditional or Roth IRA

A

TRUE

23
Q

What is the difference between Roth After TAX and Voluntary after-tax contributions?

A

VAT - You don’t pay taxes on contributions, only on gains once withdrawn

RAT- Must follow specific rules to not be taxed, but will NOT be taxed on gains and contributions

24
Q

What is Pre tax?

A

You pay taxes when withdrawn on contributions AND gains

Money that the employee or employer put in BEFORE it has been taxed

25
Q

What is After-tax?

A

You pay taxes only on gains since taxes have already been paid when contribution was made

26
Q

What are Gains?

A

Money that has accumulated from contributing to a plan.

27
Q

What is After-tax?

A

Money/contributions that is removed from salary after tax is applied on the front end.

28
Q

What is the benefit of pre tax money?

A

Tax break, taxed Deferred growth. Gains not taxable until withdrawn

29
Q

What is the benefit of after tax money?

A

Contributions are not taxed

30
Q

What is a plan document?

A

A plan in writing, detailing everything about the plan. Almost 100 pages describing what the employer is making available to employee as a retirement plan.

31
Q

Who must have a plan document?

A

Every plan

32
Q

Who must enforce the plan document?

A

Plan Administrator

33
Q

What must a plan provide to participants?

A

Summary Plan Document

34
Q

What type of plan may require information Sharing?

A

403b, and primarily NON-ERISA

35
Q

How does a plan obtain a Letter of Determination?

A

File series 5300 with the IRS

36
Q

What does the plan get by obtaining a LOD?

A

Favorable Tax Status

37
Q

What does it mean to get LOD?

A

Allows employers and employees to take advantage of the tax benefits on contributions to the plan

38
Q

Are plans protected in the car of bankruptcy?

A

Yes, except TE457(b) and TE457(f) and For-Profit NQDC

39
Q

What is the fee for PCRA

A

$50 Annually

40
Q

What company does Transamerica use for PCRA’s?

A

Charles Schwab

41
Q

Why would participant want a PCRA account?

A

Self directed and more options, whining to take more risks and doing the research for it

42
Q

What is the minimum amount of the initial transfer to PCRA?

A

$1000

43
Q

How much does each transfer after the first have to be?

A

$250

44
Q

When is the PCRA fee charged to participants accounts?

A

January of the following year

45
Q

What would you tell a participant wanting to transfer from the fixed fund to PCRA?

A

We would not be able transfer the money directly from the fixed fund to the PCRA a this time. Money would first have to be transferred to an equity/stock fund (non-competing fund). Has to stay in the equity fund for 90 days, but can move within equity during that time

46
Q

What is the equity wash rule?

A

Prohibits a participant from transferring money from a fixed fund, to a non competing fund, then transferring that specific dollar amount directly back into fixed or similar short term bond funds for 90 days

47
Q

What is the 34%/$1000?

A

The 34%/$1000 rule is a TRS rule for NFP plans (Corp:25% or $1000). The amount available to transfer from the fixed fund(s) (GDAH/GFF) is limited to the greater of 34% or $1000 per contract year

48
Q

What would you tell a participant wanting to transfer money from the fixed fund into the money market fund? Assume the fixed fund is sunburst to the 34%/$1000 rule. Assume competing fund rule is active, assume equity wash rule

A

We would not be able to transfer the money directly from the fixed fund to the money market at this time (the competing fund rule) we can only move 34% or $1000 whichever is greater from the fixed fund per contract year (34%/$1000) Money would first have to be transferred to a non competing fund and has to stay in equity fund for 90 days, can move within raptors at the that time. After 90 days, you can transfer to the money market. (Equity Wash)

49
Q

What is an interest rate?

A

The rate the participant will receive on money deposited in the fixed funds

Retirement Basics (1 decks)

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