Module 3 Key Terms Flashcards
Profit Sharing Plan
Qualified defined contribution plan is a flexible, discretionary employer contribution provision
Substantial and Recurring
Must be made every three to five years
In service Distributions
Ability of participant to access the individual account balance prior to retirement
Financial Needs Test
Hardship must be due to an immediate and heavy financial need of the participant employee
Resources Test
The participant must not have other financial sources sufficient to satisfy the need
Age based profit sharing plan
Allocations to participants are made in proportion to the participants age-adjusted compensation
Cross Tested Plan
Compliance with nondiscrimination rules is tested in accordance with benefits rather than contributions
New Comparability Plan
Cross tested profit sharing retirement plan in which the employee participants are divided into groups or classes
Stock Bonus Plan
Type of profit sharing plan with one major difference from a traditional profit sharing plan, The employer contributions and benefits distributed are made from employer stock not cash
Net Unrealized Appreciation (NUA)
Advantages of participating in a stock bonus plan. Worker must elect to receive the stock in shares instead of cash
Cash or Deferred Arrangement
(CODA)
Qualified profit sharing or stock bonus plan under which plan participant have an option to contribute money to the plan on a pre-tax basis
Elective Deferral
Option to contribute money on a pretax basis
Qualified Matching Contributions
Application of the annual additions limit
Savings/Thrift Plan
Qualified defined contribution plan that provides for and encourages after-tax employee contributions to the plan
Keogh (self employed) plan
Employer sponsered retirment plan that covers one or more self employed individuals
