Retirement Flashcards
1
Q
Defined Contribution Plans
A
- Money Purchase
- Target Benefit
- Profit Sharing
- Profit Sharing 401k
- Stock Bonus/ ESOP
- Disparity 5.7%
- $66,000 / 100%
- Exempt from creditors
- Integrated with Social Security
- Qualified / ERISA
- Administrative costs
2
Q
Non Qualified Plans
A
- SEP
- 403B
- SIMPLE
- SARRSEP
-Thrift Savings Plan
3
Q
Solo 401k / uni 401
A
- No plan testing
- $22,500 contribution + Catch-up of $7,500 (50+)
- Up to $66,000 PLUS the catch-up
- Owner only or with spouse/partner
4
Q
KEOGH - SE
A
- For self employed
- 25% comp - $66,000 Max
- No Catch-up
5
Q
457
A
- $22,500 or 100% Plus catch-up $7,500 (50+)
- OR 2 times $22,500 = $45,000 if within the last 3 years of service (Not including the final year)
- Governmental - Catch-up $7,500
- No coordination with 401k/ 403b/ SARSEP (can contribute to both)
- 457 Governmental can go to IRA
- Non-Governmental 457 cannot move to IRA
6
Q
Defined Benefit
A
- Max Comp based on $330,000
- Section 415 limit - Benefit Lesser of 265k or comp
- Unit Benefit Formula - % of earnings X service yrs X comp
- Cash balance (can be both DB / DC)
- 412i
- Contribution Actuarially determined (could exceed 300k/400k/yr)
7
Q
403B
A
- Non-Qualified
- $22,500 + catch-up $7,500 (50+)
- Extra $3,000 catch up if 15+yrs of service
- 66,000/ 100% employed
- Types of investments - Annuities, Life Ins, MFs (open)
8
Q
SARSEP
A
- Not after 01/01/1997
- up to 25 employees
- Contributions $22,500 (FICA) + $7,500 catch-up
- 100% vested immediately
- 50% of employees MUST defer
9
Q
Target Benefit
A
- Defined Contribution plan
- FIXED and MANDATORY contributions
- up to 25% employer deduction
- Stable cash flow needed
- Favors OLDER employees/owners
- $66,000 or 100% of salary
- Risk to employEE
- Benefit determined by balance
- Forfeitures either reallocated / reduce employER contributions
10
Q
Profit Sharing
A
- Defined Contribution plan
- FLEXIBLE contributions (recurring & substantial)
- up to 25% employer deduction
- hardship withdrawals
- $66,000 / 100% employer + $7,500 catch-up in 401k
- 401k provision $22,500 FICA
- in 401k loans are allowed, not hardship withdrawals
-Simple 401k exempt from creditors
- in 401k loans are allowed, not hardship withdrawals
11
Q
ADP/ACP Testing
A
- non-discrimination testing
- HCE rate Must be
1) No more than 125% NHCE rate (ADP greater than 8%) OR
2) No more than 200% NHCE & no more than 2% greater NHCE
Shorthand
0-2% = X 2%
3-8% = + 2%
12
Q
SEP IRA
A
- Employer ONLY contributions (NOT required)
- No Loans
- 100% vested - 3 yr Rule, 3 out of 5 years
- 21yr old plus paid $750 +/yr
- Alternative to Profit Sharing (but is easy & cheap)
- Integrated with Social Security
- For Self - employed -Net of Schedule C - SE 18.59% or 12.12% contribution
- Business - 25% of $66,000 contribution (w-2 employee)
- NO FICA/FUTA
13
Q
Money Purchase Pension Plan
A
- Defined Contribution
- REQUIRED contribution
- $66,000 / 100%
- 25% employer deductions
- Stable cash flow needed
- Favors YOUNG employees
- To RETAIN employees
- Age weighting & integration option
- Subject to minimum funding standard
14
Q
Defined Benefit PENSION
A
- ERISA / PBGC
- Favors OLDER employees/owners 50+
- Guaranteed benefits
- Requires VERY stable cash flow
- Past service credits allowed
- Disparity +26.25% - min 2% top heavy
- $22,500 +$7,500
15
Q
SIMPLE IRA
A
- REQUIRED employER MATCH
-$15,500 FICA + $3,500 catch-up contributions - 100% vested
- 100 employees or less
- CanNOT have another plan
- 25% penalty is withdrawn in first 2 years
