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20 Cards in this Set
- Front
- Back
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Under the six‐year graded vesting schedule, the vested percentage for a participant who has completed three years of service is 40 percent. |
TRUE 6- year grading year 1-0% year 2-20% year 3-40% year 4-60% year 5-80% year 6-100% |
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A plan may disregard all years of service prior to plan entry for determining vesting. |
NO A plan may disregard all years of service prior to the effective date of the plan when determining vesting, not entry for determining vesting. To satisfy the minimum vesting requirements of IRC§411, a participant’s vested percentage must be based on years of service and may not credit vesting only from a participant’s entry date. |
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A plan must provide for full vesting upon the total disability of a participant. |
NO A plan is not required to provide for full vesting upon the total disability of a participant, although many plans do. |
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A 401(k) plan with a discretionary match may use a five‐year cliff vesting schedule to determine a participant’s vested balance in the matching account. |
NO The plan must use either a six‐year graded or three‐year cliff schedule or anymore liberal vesting schedule. employer can manipulate how much, increasing each time, but must be fully vested at the end either by the three or six year schedule, not before. |
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A one‐year break in service is a vesting year with 500 or fewer hours. |
TRUE |
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A plan may define a break in service as 250 or fewer hours of service. |
TRUE |
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If a participant is partially vested or 100 percent vested, years before a break in service may be excluded in crediting service for vesting in the account accumulated after the participant’s rehire. |
NO The pre‐break service of non vested participants may be disregarded. The prebreakservice of partially vested participants must be counted. |
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Forfeiture is deemed to occur on the date the participant terminates employment. |
NO The plan document dictates when forfeiture is deemed to occur. Many plans provide that forfeiture occurs as of the earliest of five consecutive one‐year breaks in service or a complete distribution of the participant’s account balance. |
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Hours of service are not counted when using the elapsed time method for measuring vesting service. |
TRUE |
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A participant on unpaid paternity leave must be credited with enough hours to avoid a break in service for vesting purposes. |
TRUE |
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Based on the following information, determine Participant A’s vested account balance on December 31, 2014: • The plan uses a six‐year graded vesting schedule, taking into account all years of service for vesting purposes. • Participant A works a full‐time schedule when employed. • Participant A terminated her employment with the plan sponsor, but did not receive a distribution of her account balance from the plan. • Participant A is later rehired. Date of Hire --January 1, 2008 Date of Termination ---December 31, 2011 Date of Rehire -- December 31, 2013 Account Balance ----$10,000 (12/31/2014) A. $0 B. $2,000 C. $4,000 D. $6,000 E. $8,000 |
E since employee was hired on the beginning of 2008 and term on the end of 2011, that would give her 5 years of service. so 10, 000 x .80 = 8,000 or E |
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All of the following years of service may be disregarded for vesting purposes,EXCEPT: A. Periods prior to age 21 B. Periods prior to the effective date of the plan C. Periods during which the otherwise eligible participant did not make mandatory contributions D. Periods during which the participant had certain breaks in service E. Periods of pre‐ERISA service |
A A plan may exclude years of service prior to age 18, not 21. |
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All of the following events require full vesting, EXCEPT: A. A participant attains NRA. B. A participant is credited with seven years of service. C. A participant attains early retirement age. D. A plan requires 18 months of service for eligibility purposes. E. A participant is affected by a plan termination. |
C Although a plan may provide that a participant is fully vested upon reaching early retirement age, full vesting is not required. |
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Which of the following is/are vesting schedules that satisfy minimum vestingstandards for defined contribution plans, post‐PPA? I. Two‐year cliff (0% until year 2, then 100%) II. Three‐year graded (0% until year 2, then 50% each year thereafter) III. Five‐year graded (0% until year 2, then 25% each year thereafter) A. I only B. II only C. I and III only D. II and III only E. I, II and III |
E All of the vesting schedules shown satisfy minimum vesting standards for defined contribution plans post‐PPA. Customized cliff or graded vesting schedules are permissible, provided that defined contribution plan participants are no less vested at any point in time than they would be under the statutory cliff or graded vesting schedules |
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All of the following statements regarding a break in service for vesting purposes are TRUE, EXCEPT: A. Generally, a break in service occurs in a vesting computation period during which the participant is credited with 500 or fewer hours of service. B. A participant who completed 400 hours of service before an unpaid maternityleave may not incur a break in service if she would have had more than 500hours of service without the leave. C. A participant must terminate employment to incur a break in service. D. It is permissible for a plan to define a break in service as fewer than 500 hours ofservice.. E. A participant re‐employed after an eligible period of military service does notincur a break in service. |
C A participant does not need to terminate employment to incur a break in service.Failure to complete more than 500 hours of service (or fewer hours if the plan defines a break in service using a lesser number of hours) in a plan year will result in a break in service, even if the participant is still employed. |
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Which of the following statements regarding forfeitures in a defined contribution plan is/are TRUE? I. Forfeitures cannot be reallocated to other participants until a one‐year break in service has occurred. II. Matching forfeitures may be allocated as employer contributions other thanmatching contributions. III. The amount of forfeitures is deductible as an employer contribution each plan year. A. I only B. II only C. I and III only D. II and III only E. I, II and III |
B Forfeitures may be reallocated to other participants before a one‐year break in service has occurred. Forfeiture amounts are not deductible. The employer already received a deduction for these amounts when they were originally contributed to the plan. |
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Based on the following information, determine the participantʹs vested balance: years of vesting service 4 plan vesting schedule 6-year grade Rollover account balance $100,000 401 (k) account balance $50,000 Profit sharing account balance $30,000 Safe Harbor matching balance $25,000 A. $123,000 B. $172,000 C. $181,000 D. $193,000 E. $205,000 |
D Rollover, 401 K, and safe harbor contribution are always 100% vested. the only contribution that is subject to the 60% vesting is the profit sharing contribution of $30,000, which would have the EE have (30,000 x 60%) $18,000 that is entitled too. Thus, the participant’s vested balance is $193,000 ($100,000 +$50,000 + $18,000 + $25,000). or D |
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Based on the following information, determine Participant C’s vested percent as of June 30, 2014: • The plan year is July 1 to June 30. • The plan has been in effect since July 1,1997. • Participant C was hired April 15, 2009, and has always worked full time. • Participant C has not reached NRA. • The plan specifies a six‐year graded vesting schedule. • The plan is not top‐heavy. • All years of service are included for vesting purposes. • Vesting service is based on the plan year. A. 20% B. 40% C. 60% D. 80% E. 100% |
D employee's hired date was 04/15/2009, plan year begins on July 1 and ends on 6/31, its June 30,2014. and its a six graded vesting schedule. this means the ptp c's first year would be 6/30/10, ending on 6/30/14 (doesn't go by their hire date). which would give them 5 years of service or 80% vested. year 1 6/30/10 = 0% year 2 6/30/11 = 20% year 3 6/30/12 = 40% year 4 6/30/13 = 60% year 5 6/30/14 = 80% which gives them 5 years which is 80% or D |
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Which of the following is/are events that require full vesting of a participantʹsbenefit? I. Death of the participant II. Attainment of NRA under the plan III. Becoming disabled, according to the planʹs definition A. I only B. II only C. I and III only D. II and III only E. I, II and III |
B Although a plan may provide that a participant is fully vested upon death or disability, full vesting is not required. |
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Based on the following information, determine the amount forfeited by Participant X: • Participant X terminated employment three years ago. • Participant X was 60% vested. • Participant X took a distribution of his entire vested account in the current plan year. • Participant Xʹs account balance subject to vesting at the time of distribution was $42,000. A. $16,800 B. $25,200 C. $33,600 D. $40,000 E. $42,000 |
B Participant X was 60 percent vested upon termination. Participant X received a distribution of $25,200 ($42,000 x 60%). The remaining 40% or $16,800 ($42,000 x 40%) was forfeited. |
