Qualified Plans Characteristics Flashcards
1
Q
Defined Benefit characteristics
A
- older EE
- credit for prior service
- ER bears risk
- PBGC coverage
- forfeitures reduce ER contributions/expenses
- commingled accounts
- max EE benefit $275,000
- max ER tax deduction determined by actuary
2
Q
Defined Contribution characteristics
A
- younger EE
- EE bears risk
- forfeitures can be allocated to remaining participants
- separate accounts
- max contribution $69,000
- max ER tax deduction 25% of aggregate participant compensation
3
Q
Pension characteristics
A
- mandatory funding
- max 10% plan assets in ER securities
- no in-service withdrawals (except after 59.5yrs)
4
Q
Profit Sharing characteristics
A
- discretionary funding
- max 100% of plan assets in ER securities
- in-service withdrawals after 2 yrs participation
5
Q
DB Pension plan names
A
- Traditional DB
- Cash Balance
- 412 (i)
6
Q
DC Pension plans
A
- money purchase
- target benefit
7
Q
DC Profit Sharing plans
A
- profit sharing
- 401k
- safe harbor 401k
- age weighted
- new comparability
- stock bonus
- ESOP
- Thrift
8
Q
Target Benefit Plan
A
- defined contribution plan
- prefers older participants
- required actuarial assumption at start of plan
- max additions is lesser of 100% or $69,000
9
Q
Money Purchase Plan
A
- DC plan
- cannot adjust contribution level if profits go up or down
- based on fixed % of EE salary
- EE allowed to contribute
- no in-service distributions allowed
10
Q
Cash Balance Plan
A
- DB plan
- guaranteed investment returns
- benefit formula
- not 100% guaranteed by PBGC
- 3 yr cliff vesting ONLY
