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CFP Memorize > Retirement > Flashcards

Retirement Flashcards

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1
Q

OASDI Benefits Eligibility for Dependent/ Child

A

Under 19 full-time student (elementary, secondary school)

+18 yrs with disability occurring before 22

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2
Q

Fast vesting schedule

A

Top Heavy DB plans and ALL DC plans

3 year cliff; 2-6 year graded

Or 100% vested w/ 2 yr minimum LOS eligibility

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3
Q

Slow vesting schedule

A

Non-Top Heavy DB plans

5-year cliff; 3-7 year graded

100% vested w/ minimum 2 year LOS eligibility

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4
Q

OASDI Spousal Benefits Eligibility

A

DEATH of worker: Spouse +60 yrs
OR
Caring for child disabled before 22 yrs

RETIRED/DISABLED: Spouse +62 yrs
OR
Has a child in care 10 yrs and never remarried(+62 yrs can still receive benefits without the worker dying/retiring/disabled after 2 years in divorce)

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5
Q

Top Heavy Plan definition

A

> 60% of aggregate accrued benefits or account balances are allocated to key employees

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6
Q

Calculating Vesting amounts

A

Determine vesting schedule

Eliminate year 1 (2 year minimum LOS)

Divide 100% by remaining years

(EX. 6 year graded, Year 2 = 20%, Year 3 = 40%…)

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7
Q

Coverage Requirements Percentage

A

70%

Ratio-percentage test: must cover NHCE’s to at least 70% of the percentage of HCE’s covered

Average benefit test: NHCE benefits must be at least 70% of HCE’s

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8
Q

Number of hours in a year of service (DC)

A

1,000 hours

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9
Q

412(i) Plan

A

DB plan entirely funded with insurance

There must be an insurance need

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10
Q

Salary Deferral/reduction Max

A

$18,000

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11
Q

DC Contribution Max/Annual Additions Max/Section 415 Limit

A

$53,000

+$6,000 catch-up

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12
Q

Max DB Benefit

A

$210,000/yr

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13
Q

401K Deferrals subject to…

A

FICA and FUTA

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14
Q

DB/DC Salary Cap

A

First $265,000

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15
Q

SIMPLE IRA Salary Cap

A

$416,667

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16
Q

IRA Keys

A

NO Loans
NO Life Insurance
Immediate Vesting
May NOT be creditor protected (state-by-state)
+59 1/2 for no 10% penalty
Must take RMDs @ 70 1/2 (even if not an owner)

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17
Q

Cash Balance Plan

A 
DB Plan
Guaranteed Returns (employer)

Like a Money Purchase

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18
Q

Target Benefit

A

DC plan; no deferrals; employee takes investment risk

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19
Q

Salary Deferral/reduction Max

A

$18,000

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20
Q

DC Contribution Max/Annual Additions Max/Section 415 Limit

A

$53,000

+$6,000 catch-up

21
Q

Max DB Benefit

A

$210,000/yr

22
Q

401K Deferrals subject to…

A

FICA and FUTA

23
Q

DB/DC Salary Cap

A

First $265,000

24
Q

SIMPLE IRA Salary Cap

A

$416,667

25
Q

IRA Keys

A

NO Loans
NO Life Insurance
Immediate Vesting
May NOT be creditor protected (state-by-state)
+59 1/2 for no 10% penalty
Must take RMDs @ 70 1/2 (even if not an owner)

26
Q

Cash Balance Plan

A 
DB Plan
Guaranteed Returns (employer)

Like a Money Purchase

27
Q

Target Benefit

A

DC plan; no deferrals; employee takes investment risk

28
Q

NO other plans…

A

SIMPLE

29
Q

EASY to install and LESS EXPENSIVE than qualified profit sharing plan

A

SEP

30
Q

Form to establish SEP

A

Form 5305-SEP

31
Q

This plan is disadvantaged by returning part-time employees…

A

SEP

32
Q

No new SARSEP can be established, but…

A

SARSEP; new employees can be added if established before 1997

33
Q

DB Top Heavy Minimum Benefit for NHCEs

A

> = 2% of comp

34
Q

DC minimum employer contribution

A

> = 3% of comp

**Profit sharing plans are not subject to this, but are required to be substantial and recurring

35
Q

401k and 403b non-discrimination Testing

A

HCE’s defer 0-1%: x2 NHCE

HCE’s defer 2-8%: +2 NHCE

36
Q

Plans NOT Integrated with Social Security

A

ESOP, Stock bonus, SIMPLE, SIMPLE 401(k)

37
Q

Permitted Disparity for DC plan

A

Lesser of base or 5.7%

**Under 11%, use 1/2 of excess as base and permitted disparity

38
Q

Permitted disparity for DB Plan

A

Lesser of base or 26.25%

39
Q

Boats and Trailers HO Coverage limit

A

$1,000 in coverage C

40
Q

Taxability of Social Security

A

50% taxed at MAGI $25,000 single, $32,000 MFJ

85% taxed at MAGI $34,000 single, $44,000 MFJ

41
Q

Keogh Contribution Shortcuts

A

For 15% contributions multiply employer profit by 12.12%

For 25% contributions multiply by 18.59%

42
Q

Deductible IRA (One Spouse active participant in employer plan)

A

Inactive spouse can make a deductible contribution under $183k-191k AGI

43
Q

IRA contribution deductibility phaseouts

A

Single $65K
Married $110K
Spousal $185K

44
Q

Roth IRA Eligibility Phaseouts

A

Single $116-131k
MFJ $183-193k
Separately $0-10k (can’t happen)

45
Q

Solution for overfunded DB Plan; goal is continuation of contributions

A

Fully-fund with life insurance or some other low return vehicle.

This reduces the expected return assumptions and allows participants to continue to contribute to the plan

46
Q

VEBA benefits cannot fund…

A

Retirement or deferred compensation

47
Q

Social Security Benefits reduction before NRA/FRA

A

*1/180

Reduction of benefit per month for the 36 months preceding FRA/NRA

(EX: normal monthly benefit amt = $1,000
Taking benefits 24 months before NRA
1/180 x 24 x $1,000 = $866.60 adj. monthly benefit

48
Q

Social Security Benefits Reduction working after retirement

A

Younger than NRA in all of 2015…
$1 for every $2 earned above $15,720

Reaching NRA in 2015…
$1 for every $3 earned above $41,880 until NRA

CFP Memorize (6 decks)

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