Review questions Retirement Basics

Question 1

What are the two types of EE after tax contributions?

Answer 1

Voluntary after tax and ROTH after tax. (VAT and RAT)

Question 2

Employer money will generally always be ____- tax money. Employers may also contribute ____ money but this will be included in the participant’s taxable income in the year of the contribution.

Answer 2

Pre tax, Roth after tax

Question 3

What is the main difference between the two after-tax contribution sources?

Answer 3

VAT you always pay taxes on the gains. RAT you may be able to take tax free distributions on the gains

Question 4

What type of tax advantage do employees typically receive by contributing Pre-Tax to a retirement plan?

Answer 4

Reduction of income taxes for the amount contributed in the year of the contribution. Tax deferred growth of both contributions and gains. Lower tax bracket upon retirement.

Question 5

Many EE’s call a DB plan a _______ plan.

Answer 5

Pension plan

Question 6

What are the ways you can tell a participant has a DB plan in P3/CTI?

Answer 6

Account Balance is 0
Account number is CT, MF, BD, ZZ, AC, or GQ
Define Benefit is noted in the LOB/ plan type and ER/ Plan name
They do not have an account in P3/ CTI but are in our Taxport System

Question 7

Name the 2 types of DB plans.

Answer 7

Traditional and Cash balance

Question 8

What would you do if a participant called and said they had questions on their DB plan?

Answer 8

Verify them completely, check if they are on a DB plan, ask if they need any help on DC and transfer to the DB team

Question 9

What are the 5 types of DC plans that were discussed?

Answer 9

Money Purchase “MP”, Profit sharing “PS”, ESOP, 401(k), 403(b)

Question 10

What is the primary funding source for MP and PS plans?

Answer 10

Employers

Question 11

What type of money may be allowed for EEs to contribute in MP and PS plans?

Answer 11

VAT

Question 12

A 401(k) plan is a subset of what type of DC plan?

Answer 12

Profit sharing

Question 13

Which of the following plan types can be ERISA or Non-ERISA plan, and opt out of certain regulations that were established by ERISA legislation?
a. Money Purchase Plans
b. Traditional Profit Sharing pans
c. ESOPs
d. 401(k) plans
e. 403(b) pans

Answer 13

E. 403(b) plans

Question 14

A 401(k) and 403(b) plan allows the employee to contribute _____-tax money. If the plan allows, they may also be able to contribute ____ after-tax or ____ after-tax money.

Answer 14

Pre tax, Voluntary, Roth

Question 15

Which type of plan is a NQDC plan with a twist?

Answer 15

G457(b)

Question 16

What does NQDC stand for?

Answer 16

Non Qualified Deferred Compensation

Question 17

What are the three types of IRAs?

Answer 17

Traditional, Roth, Auto

Question 18

Which type of IRA is set up by the employer?

Answer 18

Auto IRA

Question 19

Which type of IRA is only After Tax money?

Answer 19

Roth IRA, Auto IRA (Roth only)

Question 20

Which type of IRAs allows for both Pre-tax and After-tax contributions?

Answer 20

Traditional or Auto

Question 21

True or False? There is no employer involvement in a Traditional or Roth IRA.

Answer 21

True

Question 22

True or False? DC and DB plans are protected from creditors in the event of a participant or employer bankruptcy.

Answer 22

True

Question 23

True or False? G457(b) plans are protected from creditors in the event of a participant or employer bankruptcy.

Answer 23

True

Question 24

Non-Discrimination testing compares what two groups of employees?

Answer 24

Highly compensated employees (HCE) and Non-highly compensated employees (NHCE)

Question 25

Information sharing may be required on what type of plans?

Answer 25

Non ERISA 403(b) plans

Question 26

If the service is ____ to TRS - we are taking on fiduciary responsibility.

Answer 26

Outsourced

Question 27

Whose responsibility is it to make sure the plan is administered in accordance with the plan rules?

Answer 27

Plan administator

Question 28

Each plan has a detailed outline of their retirement plan rules. What is this called? What is the simplified version of this called?

Answer 28

Plan Document (fully detailed plan)
SPD

Question 29

Who handles questions about contributions and contribution limits within Transamerica?

Answer 29

Tier 3 calls