QKA 2 Unit 1: Compensation Flashcards
What are the two types of compensation?
Direct and indirect
What are the two types of direct compensation?
Main types and supplemental types
What are examples of main types of compensation?
Salary, hourly, and commissions
What are examples of supplemental direct compensation?
Bonuses, overtime, holiday pay, PTO
What is indirect compensation? what are a few examples of indirect compensation?
1) refers to taxable, non-monetary benefits
2) reimbursements, fringe benefits, expense allowances
What is the compensation limit for DC plans in a given year?
The 401(a)(17) limit
How do fiscal year plans use the 401(a)(17) limit vs. Calendar Year Plans?
Fiscal year plans use the 401(a)(17) limit in place at the beginning of the fiscal year. Calendar Year plans just use the prescribed 401(a)(17) limit in place for each year.
What are the three main definitions (not measuring periods) of compensation used in a retirement plan?
1) 415
2) Plan
3) 414(S)
What is 415 compensation used for?
What are the three types of 415:?
1) Identifying HCEs
2) Identifying Key EEs
3) Calculating min contributions to non-key EEs in TH plans.
- Current Includable Comp
-W2
-3401A Income
What are the four permissible definitions of 415 compensation?
1) W2
2) 3401(a) Withholding
3) Statutory
4) Simplified
What are the two steps to determining for 415 Comp?
1) start with one of the four base definitions
2) Then add in these amounts: deferrals, Section 125 contributions, 132(f)(a)-Qualified Transportation Fringe Benefits
What are the 3 periods available in the Compensation Period Rule?
1) The Plan Year
2) The Fiscal Year: coinciding/ending with the Plan Year.
3) The Calendar Year- coinciding/ending with the plan year
Under 415 comp Definitions, What is the first year of eligibility rule?
The full years compensation is considered even including pre-participation compensation
What schedule is sole proprietor, earned income declared on?
 Schedule C
What schedule is partnership income declared on?
Schedule K
Reductions like health premiums and 401(k) deferral’s are not included in this type of compensation, but are included in this type of compensation.
W2, 415
414S compensation is used for nondiscrimination tests and the 4 following items: (DAMP)
1) deferrals
2) after tax employee contributions
3) matching contributions
4) permitted disparity
All 415 compensation definitions are what type of compensation?
Safeharbor definition of IRC 414S
The regulations permit, three safe Harbor modifications to the IRC415 compensation definition to arrive at IRC 414S compensation. The three modifications are: (HER)
1) HCE Comp- any portion can be excluded
2) Employer Deferrals may be included which were made on behalf of an EE that are not included in Gross Income
3) Comp may be Reduced for Reimbursements and Expense Allowances
IRC401(a)(17) compensation dollar limit is subject to annual _______, but the applicable dollar amount must always be a multiple of what?
COLAs, $5000
If a top-heavy plan, excludes, elective deferral to determine a non-key employees allocable share of employer contributions, the elective deferral’s must be what?
Added back as required under the IRC 415 compensation definition
A qualified plan may include a CODA only if it is one three types of plans which are:
Profit sharing plan, stock bonus plan, or pre-ERISA money purchase