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5 Cards in this Set
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Title I Of ERISA: -labor law provisions of ERISA -include the minimum standards foreligibility, vesting and funding - SPD is the primary disclosure documentrequired by Title I of ERISA. Title II of ERISA: -Tax- related provisions of ERISA Title III of ERISA: -Administrative provision of ERISA. Title IV for ERISA: Established: -Established the pension benefit Guaranty Corporation (PBGC), which provides an insurance program for defined benefit plans. |
basic plans Qualifications: Form and operations requirements: -Failureto satisfy the form requirement is grounds for disqualification, even if theplan is operated properly. List of requirements: -Governmentalplans and nonelecting church plans are exempt from several of the IRCrequirements. - Plans must be for the employees -assets must be held in a trust. - exclusive benefit rule: plan must be maintained for the exclusive benefit of the participants and their beneficiaries. -Minimum age and service requirements: qualified plan may not impose age and service requirements are more stringent than those permitted by IRC. Non-Discrimination Testing: qualified plan must not discriminate in favor of HCE. |
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-MinimumVesting Standards -MinimumDistribution Rules – RMDTop‐-Heavy Rules -Jointand Survivor Rules -Mergersand Transfers -AntiassignmentRule - protectionextends to garnishment, levy, execution or other legal or equitable process bythe participant’s creditors. EXCEPTIONS; -Participantloans -QDROs -federal taxlevies |
Commencement of Benefits after NormalRetirement Age Social Security Increases - qualifiedplan may not reduce plan benefits due to increases in Social Security Annual Addition Limits - qualifiedplan must not exceed the limitations on contributions and benefits Compensation Dollar Limit Withdrawal of Mandatory Contributions Pension Plan Terminations Voting Rights on Employer Securities Stock Bonus Plan Requirements Group Trust Designation of Type of DefinedContribution Plan ESOP Requirements - attainedage 55 and has at least ten years of participation in the plan must bepermitted to diversify the investment of a portion of his or her account Elective Deferral Limit Direct Rollover |
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Plan Documents: INDIVIDUALLY DESIGNED PLANS (mostflexible – updated every 5 years). plansponsor may retain legal counsel or other practitioners to prepare a plandocument from scratch, drafted particularly for that plan’ Adetermination letter is issued to the plan sponsor of an individually designedplan (not a requirement) Form5300 is used to request a determination letter for an individually designed plan. MASTER/PROTOTYPE PLANS (update every 6years) – opinion letter. Documentthat has been pre‐approvedby the IRS for use for qualified plans maintainedby any organization that expects to have atleast 30 employers adopt a basic plan document sponsored by thatorganization mayalso be provided by a mass submitter issuean opinion letter for each type of adoption agreement offered with the basic plan document opinionletter is made on Form 4461 |
VOLUME SUBMITTER PLANS – advisory letter/specimenplan sponsoringorganization submits the plan document with all its options (called a specimenplan) to the IRS for approval Issuingan advisory letter that the specimen plan satisfies the IRC’s documentqualification requirements FAVORABLEDETERMINATION LETTERS Aplan is never required to obtain afavorable determination letter and a plan may be a qualified plan withouthaving such a letter Individually designed plan needs to be restated once every five years M&P and Volume Submitter Plans changes approximately every six years |
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WHEN TO PROVIDE THE SPD – 90 days forptp’s, 120 new plan, 210 for bene’s participant must receive the SPD by notlater than 90 days A beneficiary is not required to receive an SPD until 90 days after he or she beginsto receive benefits from the plan. new plans, the 90‐day deadline is extended so that the SPDmust be provided by not later than 120 days Every fifth year, the SPD must beupdated unless there have been no amendments made Every tenth year, the SPD must beupdated, regardless of whether amendments have been made updated SPD must be provided toparticipants and to beneficiaries receiving benefits by not later than 210 daysfollowing the close of the plan year Summary ofMaterial Modification (SMM) EX: Fund change letter |
Tax Consequences of PlanDisqualification Disallowance of employers deduction. employerloses its deduction for nonvested contributionsmade to the plan for open tax years The NHCEs may be taxed on vestedcontributions taxyears generally are open for three yearsfrom the due date six‐year statute can apply if there is asubstantial under‐reporting of income No statute oflimitationsapplies if a return was not filed for the year, or if a fraudulent return isfiled. -Employees Income: openfor IRS audit for three years six‐year statute can apply if there is asubstantial under‐reporting of income No statute of limitations applies if a returnwas not filed for the year, or if a fraudulent return is filed TRUST INCOME: -statue of limitations on trust income is 3 years from the date on which the form 5500 is filed. DISTRIBUTIONS INNONQUALIFIED YEARS distributionfrom a disqualified plan is not eligiblefor rollover Taxes may apply if a distributionfrom a disqualified plan was rolled over and resulted in an excess contributionto an IRA. |
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Correctionof Disqualifying Failures (EPCRS) TYPES OFDISQUALIFYING FAILURES * Plan Document Failure * Operational Failure * Demographic Failure * Employer Eligibility Failure Late Filing of Form 5500 Series Return Prohibited Transaction Excise Taxes Title I Liability EPCRS Generally does not Waive Applicable Taxes onCorrective Action Correction of Terminated Plans Correction of Orphan Plans |
EPCRS CORRECTIONPROGRAMS (print off the diaphragm) Self‐CorrectionProgram (SCP); VoluntaryCorrection with IRS Approval Program (VCP); and AuditClosing Agreement Program (Audit CAP) – Only used when a plan is under audit. SELF‐CORRECTIONPROGRAM (SCP) self‐initiated correction program forresolving operational failures TWO‐YEAR CORRECTIONPERIOD FOR CORRECTING SIGNIFICANT VIOLATIONS UNDER SCP Using Plan Amendments to CorrectFailures PLANDOCUMENT AND DEMOGRAPHIC FAILURES: adoptionof a corrective amendment to the plan OPERATIONALFAILURES: planamendment generally is not required |
