Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key


Play button


Play button




Click to flip

18 Cards in this Set

  • Front
  • Back
Requirements To qualified Plan
- limits on contribution & benifits.
-Pre-funding benifit
-Broad Employee partipation
-Limits on ownership(vesting)
Tax benifit of a qualified plan
-ER gets immediate tax deduction.
-EE defers taxation until withdrawal.
Employee Retirement Income Security Act of 1974
Contribution limit to a defined contribution plan
ER contribution limit: up to 25% of total participants' payroll. The max. compensation taken into consideration is $220,000 per year.
EE selective defereal limit: $15,000 per year, plus $5000 catching up for EE 50 year or older.
The limit on total ER contribution and EE selective defered should be lesser 100% compensation or $44000.
Contribution limit to a defined benifit plan
Lesser of $175,000 (to 2005) or 100% conpensation
Defined contribution plan consist of
Profit sharing, employee stock ownership (ESOP), stock bonus, target benefit (pension) and money purchase (pension)
Defined benifit plan consist of
generic DB and cash balance plan
Defination of HCE
-more than 5% of ownership in current or preceding plan year
-or compensation in the prior year exceeds HCE dollar limit for that year
ADP/ACP nondiscrinimation testfor HCE
ADP: actual deferral precentage
ACP: actual contribution percentage
ADP/ACP for HCE must not exceed average deferral/contribution percentage for non HCE by 1.25.
Key Employee
-was >5% owner
-was >1% owner and receive $150,000 compensation
-was an officer of the company and recevied compensation >$140,000
Qalified Plan minimum coverage ratio Test
The number of non HCP EE covered by the plan must be not less than 70% of HCP EE covered by the plan.
Qalified Plan minimum benifit test
The average benifit for non HCE EE should not be less than 70% of the average benifit for HCE EE.
Minimum participation (50/40) test
The plan must benifits:
- 50 EEs or
-the greater of 40% of total eligible EEs
Top Heavy Plan
more than 60% of the accrued benefits are in favor of key employees.
Vesting plan for top heavy plan
-three-year cliff vesting
-two-six year graded vesting
Single ER contribution limit on multiple plans
Greater of the minimum funding requirement to the defined benifit plan or 25% of total conpensation
Multiple Plans of Multiple (Unrelated) Employers
415 Limits will apply to the individual's participation in each employer's plan seprately
Employee Elective Deferral Limit
An individual elective deferrals to different plans generally must be aggregated to comply to the limit ($15000) with the exception to 457 plan.