term1 Definition1term2 Definition2term3 Definition3
Please sign in to your Google account to access your documents:
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
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
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
Need help typing ? See our FAQ (opens in new window)
Please sign in to create this set. We'll bring you back here when you are done.
Discard Changes Sign in
Please sign in to add to folders.
Sign in
Don't have an account? Sign Up »
You have created 2 folders. Please upgrade to Cram Premium to create hundreds of folders!