Types of Retirement Plans

Question 1

Qualified Pension Plans

Answer 1

Promise either benefit or contribution

Annual funding mandatory

• DB(k) plan
• Cash balance plans
• Target benefit plans^BD
• Defined benefit plans^BD
• Money purchase plans

^BDTested for discrimination on the basis of benefits as opposed to contributions

Question 2

Qualified Profit Sharing Plans

Answer 2

Do not promise anything. No annual contrib. req.

• ESOPs
• Thrift plans
• 401(k) plans^CD
• SIMPLE 401(k)
• Stock bonus plans
• New comparability plans^BD
• Profit-sharing plans (traditional)
• Age-based profit-sharing plans^BD

^BDDiscrimination based on benefits, not contributions

^CDDiscrimination based on Employer contributions and EE elective deferrals

Question 3

Qualified non-Pension, non-Profit Sharing Plans

Answer 3

• Trad IRAs
• Roth IRAs
• SEP plans
• 403(b) plans
• SIMPLE IRAs
• SARSEP plans

Question 4

Nonqualified plans

Answer 4

• 457 plans
• Nonqualified deferred compensation plans

Question 5

DB Plan Maximum Benefit

Answer 5

$230,000 (2020)

Question 6

DC Plan Deferral Limit

Answer 6

$19,500

$6,500 50+

Question 7

DC Plan Maximum Annual Additions Limit

Answer 7

$57,000

Question 8

HCE 414(q)

Answer 8

>5% owner

• OR -

Comp > $130,000 (2020)

Question 9

Key EE 416(i)

Answer 9

• 5% Owner
• 1% Owner & Comp > $150,000
• Officer & Comp > $185,000

Question 10

SIMPLE Elective Deferral Limit

Answer 10

$13,500

$16,500 50+

Question 11

SEP Min req. earnings for eligibility

Answer 11

$600

Question 12

457 Deferral limit

Answer 12

$19,500

$26,000 50+

Question 13

Max covered comp for determining DC contrib

Answer 13

$285,000

Question 14

DB v Cash Balance: Type

Answer 14

Qualified

Question 15

DB v Cash Balance: Contribution

Answer 15

DB: Actuarially determined

Cash balance: Percentage of salary (actuarially determined)

Question 16

DB v Cash Balance: Investment risk

Answer 16

Employer

Question 17

DB v Cash Balance: Size of Work force

Answer 17

DB: Any

Cash balance: Large

Question 18

DB v Cash Balance: SS integration permitted

Answer 18

Yes

Question 19

DB v Cash Balance: PBGC ins. required

Answer 19

Yes

Question 20

DB v Cash Balance: Can EEs contribute?

Answer 20

No!

Question 21

DB v Cash Balance: Favors older EEs

Answer 21

DB: Yes

Cash balance: No

Question 22

DB v Cash Balance: Admin cost

Answer 22

Higher than DC

Question 23

Average Deferral Percentage (ADP) rules

Answer 23

NHC: ≤2%

HCE: 2xNHC

NHC: >2% but ≤8%

HCE: NHC + 2%

NHC: >8%

HCE: 1.25 * NHC

Question 24

Average Contribution Percentage (ACP) rules

Answer 24

NHC: ≤2%

HCE: 2xNHC

NHC: >2% but ≤8%

HCE: NHC + 2%

NHC: >8%

HCE: 1.25 * NHC

Question 25

Safe Harbor Matching

Answer 25

Obviates need to meet ADP/ADC testing

Match must be 100% vested

Question 26

Safe Harbor Matching Pctgs

Answer 26

0% / 0%

1% / 1%

2% / 2%

3% / 3%

4% / 3.5%

5%+ / 4%