Retirement Flashcards
Payroll and withholding calculation
[Gross pay * (1-7.65%)] - withholding %
defined benefit plan
accrued benefit is the benefit earned to date, using current salary and years of service. Accrued benefit earned for the year is the additional benefit that has been earned based upon current year’s salary and service
defined contribution plan
participants accrued benefit at any point is the participant’s present account balance. The accrual for the sepcific year is the amount contributed to the plan on the EE’s behalf for that year
controlled groups
- prevent owner from splitting their business into multiple parts and creating multiple plans
- parent - subsidy
- brother - sister
- combined group
parent subsidy
control group when one or more corp are connected through stock ownership with common parent corp
- 80% of stock of each corp owned by one or more corp in the group
- Parent corp owns 80% of at least one other corp
brother-sister
controlled group in which 5 or less common owners own directly or indirectly a controlling interest in each group AND have effective control
- controlling interest - >=80% or more of stock of each corp
- effective control - >50% of the stock of each corp, only to extent that identical with respect to other corps
combined group
3 or more orgs…
- each org is member of either parent-subsidy OR brother-sister group AND
- at least one corp is common parent, and also member of brother-sister
qualified plan loans
- repaid in 5 years unless for personal residence upto 30y
- reduce 50,000 max by highest outstanding balance w/in prior 12mths
loan may not exceed…
VB = 0-20,000
Lessor of 100% or 10,000
VB > 20,000
Lessor of 50% or 50,000
Profit Sharing Plan Establishment and Contribution Date
Due date of tax return (15th of 4th month) plus extension (6 months)
Example
- fiscal year 7/31/x0 - 11/15/x0 + 6mths = 5/15/x1
- calendar year 12/31/x0 - 4/15/x1 + 6mths = 10/15/x1
Net Unrealized Appreciation (NUA)
ER Contribution = basis = OI (+10% penalty) at distribution
NUA = growth on basis in plan = deferred LTCG when sold
Extra = growth/loss above/below Distribution = ST/LT CG/CL when sold
lump sum distributions only
412(e)(3) formerly 412(i)
- defined beneft pension plan that is funded entirely by a life insurance contract
- ER claims tax deduction for contributiions made to pay prem
RMD
- are they still working?
- are they asking for rmd for current year or following? could inculde first and next
Keogh Plans
Net SE Income
x .9235 (=Net earnings subject to SE tax)
x .124 upto 137,700 + x.029 on all
SE Tax
Net SE Income
- 1/2 SE Tax
x SE contribution rate (max 20%)
SE Individual QP Contribution Allowance
IRA vs Roth IRA distributions
IRA - OI +10%
IRA contributions and alimony
pre 12/31/2018 alimony is EI
5 year period for qualified distriibution from IRA
first day of taxable year of initial contribution - last day of 5th consecutive taxable year
SEP and Payroll Taxes
ER contributions exempt from payroll taxes
SEP maximumcontribution limit
lessor of 25% of covered comp or 57,000
no catchup provision b/c only ER funded
Retirement Questions
Read carefully
SIMPLE and vesting
100% immediate vesting
simple and annual testing
none
ER contribution included for 401k, 403b, 457b
ER contribution included for 401k, 403b, 457b
phantom stock plans
benefits paid in cash
no equity dilution from aadditional shares being issued
Cafeterial Plan and Life Insurance
TERM
Anything else must be included in GI
fully funded cross purchase plan
when one partner dies other partners will need to pay a combined 1/#partners of company value
entity approach of buy/sell agreements
how many plans?
entity has one plan on each partner
vs cross purchase - each partner has plan on every partner
Top Heavy DB/DC Funding Requitrements
DC - ER must provide at least 3% to NHC unless KE below 3%
DC = 3rd letter in alphabet
DB - ER must provide NHC 2% x yos x avg annual comp (max 20%)
DB = 2nd letter in alphabet
DB Top Heavy must also be 2-6 or 3 year cliff
vesting timeframe
based on years of service
NOT years eligible or participating
top 20% HC election
always include >5% owners and family members, even if not in top 20% salary
self reliant plans
think EE elective deferral
SIMPLE, 403b, 401k
