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8 Cards in this Set

  • Front
  • Back
Profit Sharing Plan
-The ER has the flexibility in making contribution.
-No limitation of the amount investing in ER's stock
-EE can make withdrawals while in service.
Stock Bonus Plans
-100% in ER stock
-Participants have the option to recevies cash equivalent on disribution.
ESOP, Employee Stock Ownership Plan
-Allow participants the right to request the benifit to be distributed in the form of ER security (stock)
-Allow EE to ask ER to repurchase the distributed security if they are not publickly traded.
-Can use leverage. The plan can borrow money to purchase ER stock.
NUA (net unrealized appreciation)
-When the stock is distributed, the stock gaining is not taxble unless the participant to select of out of this treatment.
-The amount taxable on distribution is the basis established when each contribution of stock was made or purchased bh the plan.
-The participant will pay long term capitable tax when the stock is sold.
Question: Is the NUA treatment available for the ER stock in the 401k plan?
Safe Harbor 401k Plan
ADP/ACP nondiscrimation and top heave test will be satisfied if the ER selects safe harbor plan:
-ER matching 100% of EE sective deferrals up to 3% and 50% from 3% to 5% or
-ER makes a nonelective contribution of 3% for each non HCP EE.
-100% vesting when the contribution is made.
Only two contributions:
-EE slective deferral not exceed $10,000, plus $2500 for 50-old catching up.
-ER match can take one of two formuals:
a.Matching 100% up to 3% of EE elective deferral
b. 2% nonselective match to all EE earning more than $5000 from the current year.
Simplifed Employee Pension (SEP)
-ER contribution to a EE owned IRA acount.
-not a qualified plan, but having favorable tax treatment.
-Contribution must be made to all EEs meeting the requirements (21-year old, earn at least $300, perform service for the ER at least 3 out of last 5 years.
-ER contribution is fully discretionary
-100% ownership by EEs.
Saving Incentive Match Plan for Employees (SIMPLE Plan)
a. No more than 100 EEs, earning at least $5000 during preceding year.
b. No other retirement plan is provided by ER.
a. EE contribution, up to $10,000.
b. ER matching, 100% matching up to 3%, can be reduced to 1% in 2 out of 5 years. or nonselective match: 2%.