Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Patrick CFP > Retirement Plan Identification > Flashcards

Retirement Plan Identification 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
Catch-up contributions for 401k plans
$7500, must be age 50+, not included in annual additions limit
26
description of ER contributions for 401k plans
not required but typically makes some type of matching contribution
27
plans that offer participant loans and hardship withdrawals
1. traditional profit sharing 2. 401k
28
Plans that must offer minimum diversification alternatives for EE elective deferrals
401k, minimum is 3 alternatives
29
a plan that is subject to EE contributions ADP testing and ER contributions ACP testing
401k
30
elective deferral aggregation rules
same $23,000 deferral limit for multiple 401ks and 403Bs, but not 457s
31
plans that require mandatory ER contributions
1. Money Purchase Pension Plans
32
plans that may invest no more than 10% in ER stock
1. Money Purchase Pension Plans 2. Target Benefit Pension Plans
33
money purchase pension plan contributions
1. mandatory on an annual basis 2. 100% ER 3. typically a % of EE comp
34
a plan with no in-service withdrawals until age 62
Money purchase pension plan
35
Which plan? 1. Easy for EEs to understand with guaranteed contributions. 2. ER wants EEs to bear investment risk 3. Younger participants
Money purchase pension plan
36
Plan that is designed by an actuary in the first year only
Target Benefit Pension Plan
37
The most common pension formula
(% of pay) x (number of years of service)
38
"Active participation" in a traditional DB plan means
accruing a benefit of any amount, for IRA deduction purposes
39
A plan that has "hypothetical" participant accounts for the purpose of record-keeping only. The accounts are not participant-directed.
Cash Balance Pension Plan.
40
A plan that offers a guaranteed benefit in the form of a cash balance at normal retirement age
Cash Balance Pension Plan
41
Benefit accrual for Cash Balance plans
Yearly accrual: 1. "Pay credit" - % of comp 2. "Interest rate credit" This provides a uniform benefit for all EEs
42
A DB plan that is easy to understand
Cash Balance Pension Plan
43
403b Catchups
1. Age 50 - $7,500 2. 15 years of service - $3,000
44
Early Withdrawals
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
403b Allocation Choices
1. Mutual Funds 2. Annuities
46
457b Catchups
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
Excess benefit plan
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
Plans for top executives that exceed limits available thru qualified plans
Nonqualified deferred compensation plans
49
SERP acronym
Supplemental executive retirement plan
50
What a SERP promises
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
Goal of NQDC plans
Avoid constructive receipt and current taxation. There must be substantial risk of forfeiture.
52
Informally funded NQDC plans use
cash value life insurance
53
Tax treatment of NQDC plans
When there is no longer a substantial risk of forfeiture, the exec recognizes income and the employer receives a deduction
54
Rabbi trust
provides some security to the exec in safeguarding payment of the promised deferred compensation benefits
55
Rules around Rabbi Trust Funds
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
Secular trust
Not subject to company's creditors and results in immediate compensation recognition
57
Which type of plan should be chosen? 1. currently deductible contributions 2. benefits not currently taxable
Qualified plans Tax-Advantaged Plans
58
Which type of plan should be chosen? 1. currently deductible contributions 2. ER can limit participation to select individuals
Nonqualified Section 162 Bonus Plan
59
Which type of plan should be chosen? 1. benefits not currently taxable 2. ER can limit participation to select individuals
NQDC Plan
60
Tax treatment of NQSOs
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
Tax Treatment of ISOs
1. Exercise of ISOs is a preference item for AMT 2. Cap gains/losses on the difference between grant price and FMV
62
Qualification of ISOs
Must sell after: 1 year from exercise 2 years from grant Otherwise, NQSO
63
Cap on ISOs
$100,000 per year

Patrick CFP (15 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions