Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Patrick CFP > Retirement Plan Identification > Flashcards

Retirement Plan Identification Flashcards

You may prefer our related Brainscape-certified flashcards:
CFP® flashcards
1
Q

annual additions limit inclusions

A
  1. ER contributions
  2. EE elective deferrals
  3. reallocated forfeitures
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

the types of profit-sharing plans

A
  1. traditional
  2. Section 401(k)
  3. Stock Bonus
  4. ESOP
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

the types of DC pensions

A
  1. Money Purchase
  2. Target Benefit
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

participant-directed accounts

A

DC plans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

annual additional limit of $69,000

A

DC plans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

maximum compensation considered in benefit formula of $345,000

A

all plans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

participant bears the investment risk

A

DC plans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

no guaranteed final benefit amount

A

DC plans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

DC vesting

A
  1. 3 year cliff
  2. 2-6 year graded
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

DC plan deductible ER contribution

A

25% of covered payroll

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

plan that guarantees a final pension

A

traditional DB pension plan, max $275,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

DB plan vesting

A

Traditional:
1. 5 year cliff
2. 3-7 year graded

Cash Balance: 3 year cliff

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

a requirement of joint and survivor payout unless waived

A
  1. DB plans
  2. Money Purchase Pension Plans
  3. Target Benefit Pension Plans
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

no participant-directed accounts; sponsor bears the investment risk

A

DB plans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

annual actuarial work is required

A

DB plans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

covered by PBGC insurance

A

qualified DB plans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

50/40 rule

A

the total participants benefiting in a plan must equal at least the smaller of 50 employees or 40% of all non-excludable employees

applies to DB plans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

no predetermined maximum deductible ER contribution

A

DB plans - whatever it takes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

description of traditional profit sharing contributions

A
  1. “Substantial and recurring” - 3 of the last 5 years
  2. Profit not required.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Plans that may invest 100% in ER stock

A
  1. Traditional profit sharing
  2. 401k
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Plans that are typically not subject to QJSA

A

traditional profit sharing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Plans that can be “age-weighted”

A
  1. Traditional profit sharing
  2. Target benefit pension plans
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

CODA

A

Cash or Deferral Arrangement provision added to an underlying profit sharing plan, stock bonus plan, or ESOP. AKA a 401k

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

EE annual elective deferral for Section 401(k)

A

Lesser of:
1. 100% of comp
2. $23,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Catch-up contributions for 401k plans

A

$7500, must be age 50+, not included in annual additions limit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

description of ER contributions for 401k plans

A

not required but typically makes some type of matching contribution

27
Q

plans that offer participant loans and hardship withdrawals

A
  1. traditional profit sharing
  2. 401k
28
Q

Plans that must offer minimum diversification alternatives for EE elective deferrals

A

401k, minimum is 3 alternatives

29
Q

a plan that is subject to EE contributions ADP testing and ER contributions ACP testing

A

401k

30
Q

elective deferral aggregation rules

A

same $23,000 deferral limit for multiple 401ks and 403Bs, but not 457s

31
Q

plans that require mandatory ER contributions

A
  1. Money Purchase Pension Plans
32
Q

plans that may invest no more than 10% in ER stock

A
  1. Money Purchase Pension Plans
  2. Target Benefit Pension Plans
33
Q

money purchase pension plan contributions

A
  1. mandatory on an annual basis
  2. 100% ER
  3. typically a % of EE comp
34
Q

a plan with no in-service withdrawals until age 62

A

Money purchase pension plan

35
Q

Which plan?
1. Easy for EEs to understand with guaranteed contributions.
2. ER wants EEs to bear investment risk
3. Younger participants

A

Money purchase pension plan

36
Q

Plan that is designed by an actuary in the first year only

A

Target Benefit Pension Plan

37
Q

The most common pension formula

A

(% of pay) x (number of years of service)

38
Q

“Active participation” in a traditional DB plan means

A

accruing a benefit of any amount, for IRA deduction purposes

39
Q

A plan that has “hypothetical” participant accounts for the purpose of record-keeping only. The accounts are not participant-directed.

A

Cash Balance Pension Plan.

40
Q

A plan that offers a guaranteed benefit in the form of a cash balance at normal retirement age

A

Cash Balance Pension Plan

41
Q

Benefit accrual for Cash Balance plans

A

Yearly accrual:
1. “Pay credit” - % of comp
2. “Interest rate credit”

This provides a uniform benefit for all EEs

42
Q

A DB plan that is easy to understand

A

Cash Balance Pension Plan

43
Q

403b Catchups

A
  1. Age 50 - $7,500
  2. 15 years of service - $3,000
44
Q

Early Withdrawals

A

HSA: 20% penalty prior to age 65 (non-qualified)
401k: 10% penalty prior to age 59.5
403b: 10% penalty prior to age 59.5
457b: No penalty

45
Q

403b Allocation Choices

A
  1. Mutual Funds
  2. Annuities
46
Q

457b Catchups

A
  1. Age 50 - $7,500
  2. Last 3 years of service at plan normal retirement age - Unused deferrals from past service, up to double contribution limit. Doesn’t stack with $7500.
47
Q

Excess benefit plan

A

Typically mirrors a qualified plan benefit formula but is not subject to funding or benefit amount limits, covered comp limits, or an annual additions limit

48
Q

Plans for top executives that exceed limits available thru qualified plans

A

Nonqualified deferred compensation plans

49
Q

SERP acronym

A

Supplemental executive retirement plan

50
Q

What a SERP promises

A

to pay an exec additional comp of a specified amount for a specified period with the contingent of the exec remaining for a specified period and/or attaining specific goals

51
Q

Goal of NQDC plans

A

Avoid constructive receipt and current taxation. There must be substantial risk of forfeiture.

52
Q

Informally funded NQDC plans use

A

cash value life insurance

53
Q

Tax treatment of NQDC plans

A

When there is no longer a substantial risk of forfeiture, the exec recognizes income and the employer receives a deduction

54
Q

Rabbi trust

A

provides some security to the exec in safeguarding payment of the promised deferred compensation benefits

55
Q

Rules around Rabbi Trust Funds

A
  1. Funds not available to the corp for other purposes
  2. Safeguarded in a merger/acquisition
  3. No recognized income because there is still substantial risk of forfeiture
56
Q

Secular trust

A

Not subject to company’s creditors and results in immediate compensation recognition

57
Q

Which type of plan should be chosen?
1. currently deductible contributions
2. benefits not currently taxable

A

Qualified plans
Tax-Advantaged Plans

58
Q

Which type of plan should be chosen?
1. currently deductible contributions
2. ER can limit participation to select individuals

A

Nonqualified Section 162 Bonus Plan

59
Q

Which type of plan should be chosen?
1. benefits not currently taxable
2. ER can limit participation to select individuals

A

NQDC Plan

60
Q

Tax treatment of NQSOs

A
  1. “Bargain element” subject to W-2 taxation
  2. cap gains/losses on the difference between stroke price and FMV
    (3. corporation receives a deduction at exercise)
61
Q

Tax Treatment of ISOs

A
  1. Exercise of ISOs is a preference item for AMT
  2. Cap gains/losses on the difference between grant price and FMV
62
Q

Qualification of ISOs

A

Must sell after:
1 year from exercise
2 years from grant

Otherwise, NQSO

63
Q

Cap on ISOs

A

$100,000 per year

Patrick CFP (15 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions