Retirement Chapter 7: Other Tax-Advantaged Retirement Plans Flashcards
What are some true statements about SEP plans?
SEP contributions cannot exceed the lesser of 20% of eligible compensation (up to $345,000) or $69,000 (corporations only)
Contributions to a SEP cannot exceed 20% of the self-employed individuals eligible net earned income less the self-employment tax (like a Keogh)
Form 5305-SEP
ER contributions to the EE’s account must be immediately vested.
Are SARSEP IRAs made with pre-tax dollars?
Yes; Salary Reduction SEP
When is an EE generally eligible to participate in a SEP?
If the EE received a minimum of $750 in the current year of employment and worked for the ER during 3/5 of the preceding calendar years. Must be 21 y/o.
Can SEPs be age weighted?
No
Can SEPs be integrated with Social Security?
Yes
A one-person sole proprietorship can install a SEP. It does not have to be a standalone plan.
True
Can SEPs offer hardship withdrawal or loan provisions?
No; because a SEP makes contributions into individual IRA accounts
What is the maximum deferral limit for a SIMPLE?
$10,000 indexed; $16,000; $3,500 special catch-up provision
Can a SIMPLE plan invest in collectibles, annuities, or U.S. government issued gold coins?
Annuities may be used as a funding vehicle, but life insurance is not allowed in any IRA type arrangement.
Collectibles cannot be used as a funding vehicle.
U.S. gold-minted coins are acceptable.
For any IRA type plan, vesting is immediate.
Anyone who is eligible to participate in a SIMPLE plan could receive a 2% nonelective contribution even if he/she were not deferring (this is an option an ER has).
True
Under a SIMPLE IRA, the ER contributions represent $1-$1 matching contribution up to 3% of the EE’s compensation.
Compensation cap is not used?
403(b) maximum deferral
lesser of $23,000 or 100% of compensation
What investments are not permissible for 403(b) plans?
UITs, closed-end funds, or individual securities
Cash value life insurance must be an incidental benefit
What contributions are always 100% vested to the EE?
Matching contributions for a SIMPLE/SIMPLE 401(k)
ER contributions for SARSEP and SEP
Why don’t states generally sponsor 403(b)s?
A state or local government can be a qualified ER but only with regard to EEs who perform service, directly or indirectly, for an educational organization.
Requirements for 403(b)?
501(c)(3)
non-profits organized for religious, charitable, scientific, literary, or educational purposes
churches, hospitals, private schools, colleges, and charitable institutions
regular faculty and curriculum and regularly enrolled student body
Are churches eligible for 457s?
No