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3 Cards in this Set
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Categories of Retirement Plans DEFINEDCONTRIBUTION – EE contr/responsible - individualaccount plan, maintains an individual account balance for each participant. DEFINEDBENEFIT PLANS – ER has to contr/responsible – amount available to provide benefits atretirement is determined by a formula stated in the plan. Employee benefit plansare divided into two categories: employeepension benefit plans - retirementbenefits or the deferral of income to termination of employment or beyond employeewelfare benefit plans -benefits such as health, life or disability |
PENSION PLANS VS. NONPENSION PLANS PensionPlans/Defined benefit/contribution – planintended to provide for the livelihood of the employees or their beneficiaries.Established and maintained by an employer Defined benefit plans are always pensionplans. PensionPlans: money purchase plans and target benefit plan 1st major requirement is for a pensionplan to have definitely determinablebenefits 2nd major requirement for a pension plan is thatit may not permit in-service withdrawalsprior to the age 62 must comply with the minimum fundingrequirements required to comply with the qualified joint and survivor rules Nonpensionplans - do not have tosatisfy the definitely determinable benefits requirement. Employer may havediscretion to determine the amount to be contributed each year. Nonpensionplans/defined contribution:profit sharing plans and stock bonus plans and 401k plans profit sharing plan - employer’scontribution is discretion. No contribution is mandatory stock bonus plan - benefits aredistributable in employer stock |
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Types of DefinedContribution Plans: PROFITSHARING PLANS/NON-PENSION PLAN * employer is NOT required to have profits to contribute * distributable in employer stock * Imposes minimum funding requirements * They may not include a 401(k) feature |
TARGETBENEFIT PLANS/PENSION PLAN: determinable benefits requirement *top‐heavy rules apply to SEPs * make elective contributions * SIMPLE IRAs are deemed to be nondiscriminatory * SIMPLE IRA does not have to file a Form 5500 |
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exclusive plan requirement * notice and election periods * employer contribution requirements * deemed nondiscriminatory status * nonforfeitability of all contributions * inapplicability of top‐heavy rules * Simple IRA and Sep IRA does not have to file a Form 5500 * Simple IRA and Simple 401k are exempt from top heavy requirements * are not subject to aggregation |
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