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Retirement Savings And Income Planning > Retirment Plan Overview > Flashcards

Retirment Plan Overview Flashcards

1
Q

What are the four categories of retirement plans and which ones are qualified plans?

A

Defined benefit pension plans

Defined contribution plans

Other tax advantage plans

Nonqualified plans

Qualified plans are benefit, pension plans, and defined contribution plans

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2
Q

What are the defined benefit pension plans?

A

Traditional define benefit pension plans

Cash balance pension plan

DB(K)

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3
Q

What are the defined contribution plans?

A

Money purchase pension plan

Target benefit pension plan

Profit sharing plans

Stock bonus plan

Employees stock ownership plan (ESOP)

Section 401K plan

Thrift plan

Simple 401(k) plan

Age based profit-sharing plan

New comparability plan

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4
Q

What are the other tax-advantaged plans?

A

SEP Plan

SARSEP plan

Traditional IRA

Roth IRA

Section 403B plan

Simple IRA

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5
Q

What are the nonqualified plans?

A

Deferred compensation plan

Section 457 plan

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6
Q

What plans are employer contributions deductible?

A

All of them

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7
Q

Are employer contributions to qualified and other tax advantage plans subject to payroll tax?

A

No

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8
Q

Are employee contributions to qualified and other tax advantage plans subject to payroll tax?

A

Yes

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9
Q

Net unrealized appreciation (NUA) treatment for employer stock is used for qualified plans or other tax advantage plans?

A

Used for qualified plans, but not other tax advantage plans

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10
Q

The 20% withholding on distributions is required for qualified plans or other tax advantage plans?

A

Qualified plans, but not other tax advantage plans

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11
Q

Qualified and other tax advantage plans

Which one may invest in life insurance?

A

Qualified plans, but not other tax advantage plans

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12
Q

Qualified and other tax advantage plans

In-service withdrawals are allowed in which plans

A

Both with certain rules

Pension plans May permit in-service withdrawals from employees age 59 1/2 or older

Profit sharing plans there may be limitations in the plan for employer contributions

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13
Q

Qualified and other tax advantage plans

Investment in employer securities may exceed 10% in which of these

A

Yes, other tax advantage plans

Underqualified plans no for pension plans and yes for profit sharing plans

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14
Q

Qualified and other tax advantage plans

Which offer 100% immediate vesting

A

Qualified plans no, with the exceptions of profit sharing plans employee will be automatically fully invested when he attends normal retirement age under a section 401(k) plan, elective deferral, qualified, non-elective, and qualified, matching contributions and safe harbor contributions to a safe harbor section 401(k) plan are 100% vested at all times

Other tax advantage plans are 100% immediate vesting, but a 403B plan can have vesting schedules

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15
Q

Employer contributions

Which plans have mandatory employer contributions?

A

Define benefit pension plan

Money purchase pension plan

Cash balance pension plan

Target benefit pension plan

Simple plan

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16
Q

Employer contributions

Which plans have discretionary employer contributions?

A

Profit sharing plan

Stock bonus plan

Savings or thrift plan

Section 401(k) plan

ESOP

SEP / SARSEP

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17
Q

Under which retirement plans plans are employee contributions pretax

A

DB(K) plan, which is a sort of defined pension plan

Profit sharing plans , also after tax

401(k) , also after tax

SARSEP (Existing)

Simple

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18
Q

Under which retirement plans are employee contributions after tax?

A

Money purchase plans

Profit sharing plan , also pretax

Savings or thrift plan

401(k) , also pretax

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19
Q

Which retirement plans have guaranteed interest credit

A

Cash balance pension plan

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20
Q

Which retirement savings plan has leverage borrowing to purchase company stock?

A

ESOP

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21
Q

Which retirement plans do not allow in service withdrawals

A

Cash balance pension plan

Target benefit pension plan

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22
Q

Which retirement plans offer in-service withdrawals after age 59 1/2

A

Defined benefit pension plan

Money purchase pension plan

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23
Q

Which retirement plans do not allow employer securities

A

SEP/SARSEP

SIMPLE

24
Q

Which retirement plans allow investment employers securities up to 10%?

A

Define benefit pension plans

Money purchase pension plans

Cash balance pension plans

Target benefit pension plans

25
Q

Which retirement plans allow you to invest in an unlimited amount of employer securities?

A

Profit sharing plan

Stock bonus plan

Savings or thrift plan

Section 401K plan

ESOP

26
Q

Which retirement plans do not allow integration with Social Security?

A

ESOP

SARSEP

SIMPLE

27
Q

What retirement plans must use forfeitures to offset plan expenses?

A

Defined benefit pension plan

Cash balance pension plan

28
Q

Which retirement plans are forfeitures not applicable?

A

SEP / SARSEP

SIMPLE

29
Q

Which retirement plans can you offset forfeitures to plan expenses?

A

Money purchase pension plan

Profit sharing plan

Stock bonus plan

Savings or thrift plan

401(k)

ESOP

Target benefit pension plan

30
Q

In retirement plans loans are possible from all plans except?

A

SEP / SARSEP

SIMPLE but allowed for SIMPLE section 401k

31
Q

All retirement plans allow 10 year forward averaging except which ones

A

SEP / SARSEP

SIMPLE, except SIMPLE 401k

32
Q

In retirement plans, the employee takes on all the investment risk except for which types of plans. These plans, the employer takes the risk.

A

Define benefit pension plan

Cash balance pension plan

33
Q

Which retirement plans have actuarial cost?

A

Define benefit pension plans

Cash balance pension plan

Target benefit pension plan

34
Q

Which retirement plans are covered by PBGC insurance?

A

Define benefit pension plan

Cash balance pension plans

35
Q

Which retirement plans have immediate 100% vesting?

A

401(k) employee contributions only not for employer contributions

SEP / SARSEP

SIMPLE

36
Q

Which retirement plans have 5-year cliff or 3-7 year graduated?

A

Define benefit pension plan

37
Q

Which retirement plans have 3 year cliff or 2 - 6 year graduated?

A

Defined benefit pension plan if top-heavy

Money purchase pension plan

Profit sharing plan

Stock bonus plan

Savings or thrift plan

401(k) employer contributions

ESOP

Cash balance pension plan, 3-year cliff only

Target benefit pension plant

38
Q

Which retirement plans favor older employees

A

Define benefit pension plans

Target benefit pension plants

Profit sharing plan can favor older employees if age weighted or if a new comparability profit-sharing plan

39
Q

What is the maximum limit for a defined benefit plan?

A

275,000

40
Q

What are the define contribution plan annual edition limits lesser of:

A

$69,000

Percent of compensation 100%

The lesser of either of these

41
Q

What are section 401(k) and section 403B deferral limits

A

$23,000

42
Q

What is the IRA contribution limit for 2024?

A

$7000

43
Q

What are the catch up provisions for 401(k), SARSEP, 457 and 403B plans?

A

$7500

44
Q

What are the catch-up provisions for a SIMPLE?

A

$3500

45
Q

What are the catch-up provisions for an IRA?

A

$1000

46
Q

How much can you contribute to a SIMPLE plan?

A

$16,000

47
Q

What is the minimum earnings required for employee to be eligible for a SEP plan?

A

$750

48
Q

What is the maximum compensation that can be taken into account when determining contributions to a SEP plan?

A

$345,000

49
Q

What is the maximum combined employer and employee contributions to a section 457 plan?

A

$23,000

50
Q

What is the maximum compensation that can be taken into account on determine qualified plan contributions

A

$345,000

51
Q

What is the Social Security integration wage base?

A

168,600

52
Q

What is the Medicare wage base?

A

Unlimited

53
Q

What are the advantages to qualified plans for the employer?

A

Employer contributions are deductible and no payroll tax

54
Q

What are the advantages to a qualified plan for the employee?

A

Employee contributions are

Deductible , except thrift or Roth - but payroll is taxed

Earnings are tax deferred

ERISA protection

Net unrealized appreciation

55
Q

What are some of the disadvantages of qualified plans?

A

Costs

Participation

Vesting

Top heaviness

Minimum contributions

Reporting

Disclosure

Testing (50/40 Defined benefit ratio Test, Average benefit % test, Section 401k ACP, Section 401k ADP

2024 limits (compensation limit = $345,000, define benefit limit = $275,000, defined contribution = Lessor of 100% EE compensation or $69,000)

Nondiscrimination

Fairness coverage

Highly compensated

Key employees

56
Q

What are some of the objectives and questions to plan selection?

A

Cost and operation

Cash flow, funding and flexibility

Reporting

Self reliance

Investment risk

Nature of benefits - cash/stock

Maximum deferral

57
Q

What are ways to increase profit sharing in retirement plans

A

Forfeitures

Integration

Age Weighting

Retirement Savings And Income Planning (12 decks)

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