Retirement

Question 1

TOP Heavy Plans (Minimum Contribution)

DB = ?
DC = ?

Answer 1

DB Plan, B Second Letter = 2%,

DC Plan, C Third Letter = 3%

Question 2

DC Vesting

Answer 2

2-6 Graded
3 Yr Cliff
2 year waiting election immediate vesting

Safe harbor plans require 100% vesting, while 401(k) plans with QACAs require two year 100% vesting

Question 3

DB PLAN VESTING

Answer 3

3-7 Graded
5 Year Cliff
2 year waiting election immediate vesting

If Top Heavy
2-6 Graded
3 Yr Cliff

Question 4

Cash Balance Vesting

Answer 4

3-YEAR CLIFF

Question 5

Other Tax- Advantaged Plans

Answer 5

SEP
SARSEP - no SS integration
IRA, TRADITIONAL AND ROTH
403(B)
SIMPLE IRA

Question 6

Defined Contribution Plans

Answer 6

DC PENSION PLANS
Money Purchase pension plan
Target Benefit pension plan

DC PROFIT SHARING PLANS
Traditional profit-sharing plan
Stock bonus plan
ESOP - no SS integration
401(k)
Thrift
SIMPLE 401(K) - no SS integration
Age based profit-sharing plan
New comparability plan

Question 7

Defined Benefit Pension PlanS

Answer 7

Traditional DB pension plan
Cash balance pension plan
DB(k)

Question 8

PLANS WITH NO SS INTEGRATION

Answer 8

ESOP
SARSEP
SIMPLE
401(k) - EXCEPT PROFIT SHARING PORTION

Question 9

PLANS WITH MANDATORY EMPLOYER CONTRIBUTIONS

Answer 9

DB pension plans
Money purchase pension plan
Cash balance pension plan
Target benefit pension plan
SIMPLE

Question 10

KEY EMPLOYEE

Answer 10

1. An officer with compensation greater than $200,000 (2022).
2. A greater than 5% owner.
3. A greater than 1% owner with compensation greater than $150,000 (not indexed).

Question 11

RATIO TEST AND AVERAGE BENEFITS TEST

General rule—the employer must cover 70% of all eligible nonhighly compensated
employees (safe harbor test). Plans that do not meet the safe harbor test must satisfy
one of the following two exceptions: the ratio test or the average benefits percentage
test.

Ratio test → (% NHC covered / % HC covered) ≥ 70%

Average benefits % test → (Average benefits % NHC covered / Average benefits % HC covered) ≥ 70%

Answer 11

Employer employs 200 nonexcludable employees of whom 10 are highly compensated. Nine of
the 10 highly compensated and 120 of the 190 eligible nonhighly compensated employees
benefit from the plan. The average benefit for the highly compensated is 8% and the average
benefit for the nonhighly compensated is 6%.

Ratio test → 120/190 divided by 9/10 = 70%

Average benefits % test → 6%/8%= 75%

Question 12

When is a plan Top-Heavy?

Answer 12

If >60 percent of the benefits or contribution are going to key employees

Question 13

ADP SCHEDULE

Answer 13

≤ 2% = 2 times ADP for NHCs

> 2%, but ≤ 8% = 2% plus ADP of NHCs

> 8% = 1.25% times ADP for NHCs

Question 14

ACP Test

Answer 14

≤ 2% = 2 × ACP of NHC
> 2%, but ≤ 8% = 2% + ACP of NHC
> 8% = 1.25 × ACP of NHC

Question 15

Self-employed person has a table factor of how much can contribute to plan. For example if the plan allows 18% contribution then the table factor is what?

Answer 15

18/1.18 = 15.25% that the self employed person could contribute to his or her plan.

Question 16

SIMPLE IRA
No more than how many employees?

Max deferral and catch-up

Employer contributions?

Answer 16

• 100
• 14k and 3k
• Must make 3% matching or 2% non-elective

Question 17

What is the maximum loan from a qualified plan?

How long to pay it back?

Answer 17

50% of account balance or $50,000

5 years

Question 18

What is safe harbor 401k employer contribution requirement?

Answer 18

Matching- 4%

Non-elective - 3%