Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
22 Cards in this Set
- Front
- Back
|
Qualified plan employer advantages |
Contributions are tax deductible and not subject to payroll tax |
|
|
Qualified plan employee advantages |
Pretax contributions Tax deferral of earnings on contributions ERISA protection Lump sum distribution options |
|
|
Highly compensated employee |
More then 5% owner- including lineal family members Compensation over $135k in prior plan year |
|
|
50/40 test |
Defined benefit plans 50 people or 40% |
|
|
Key employee |
Over 5% owner Over 1% owner earning over $150k Officer earning over $200k Must be owner or officer |
|
|
Defined benefit plans |
Require actuary Risk borne by employer Forfeitures reduce plan costs PBGC insurance SS offset or excess Commingled accounts Favors older employees |
|
|
Defined contribution plans |
No actuary Risk by employee Forfeitures reduce plan cost or allocate to others No PBGC No credit for prior service SS excess only Seperate accounts Favors younger |
|
|
Which entities can establish 401k |
Corporation Partnership LLC Proprietorships Tax exempt entities |
|
|
Safe harbor |
Cover over 70% NHC |
|
|
Ratio test |
%NHC/%HC over 70% |
|
|
Avg benefits test |
AB % NHC/ AB % HC over 70% |
|
|
Exceptions to 10% penalty |
Death Age 59 1/2 Substantially equal periodic payments Medical expenses over 7.5% of AGI 5k per taxpayer for birth or adoption QDRO Public safety employee after age 50 Age 55 and separation of service |
|
|
Prohibited IRA transactions |
Selling exchanging or leasing property to an IRA Lending to an IRA Receiving unreasonable compensation for managing an IRA pledging an IRA as security for a loan Borrowing from an IRA buying property for personal use from an IRA |
|
|
Short term disability time frames |
8th day for illness, 1st day for accident Lasts 6 months |
|
|
Legal requirements for profit sharing plans |
Forfeitures must be used to reduce ER contributions or reallocated to other employees Employer deductions limited to 25% of participants covered compensation Allocations to participants account cannot exceed 61k or 100% of compensation |
|
|
Rules for non safe harbor 401k deferrals |
Limit $20500 plus catch up Non discrimination ADP test applies |
|
|
Legal requirements for 401k plans |
Employee contributions do not have to be made from profits Employee elective deferral elections must be made before the compensation is earned Hardship withdrawals are subject to 10% penalty ADP tests can be avoided using special safe harbor provisions |
|
|
Profit sharing plan vesting requirement |
2-6 year graduated 3 year cliff Or more generous |
|
|
Maximum defined benefit |
$245k or compensation Or funding formula limit |
|
|
403b long service catch up eligible organizations |
Health, Education, Religious HER |
|
|
Aggregated RMD rules |
Qualified plans must be taken separately IRAs can be aggregated |
|
|
Are 457b contributions deductible for the employer |
No because the employer is tax exempt |
