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13 Cards in this Set
- Front
- Back
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Stmt: The annual additions limit for 2015 (the lesser of 100% of pay or $53,000) applies to additions to a participant's account in all types of defined contribution plans. The employer deduction limit is a separate limit; it is 25% for profit sharing plans, money purchase plans, target plans, and multiple defined contribution plans. The annual additions limit for a participant in multiple defined contribution plans of the employer or related employers must also be aggregated. |
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Stmt: An employer may disregard "leased employees" if they are covered by the leasing organization's money purchase pension plan. The plan must provide for an employer contribution of at least 10%, immediate participation, and 100% immediate vesting. The leasing organization must sponsor a money purchase pension plan; any other type of plan (e.g., a profit sharing plan) will not meet the requirements of the law. The money purchase pension plan must provide for an employer contribution of at least 10%.
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All of the following are characteristics of an owner/employee's participation in a Keogh plan: 1) the employer contribution to the owner/employee's account is based on net earnings (with required modifications) rather than on compensation. 2) the same maximum employer contribution limit applies to profit sharing Keogh plans and money purchase pension Keogh plans.
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Keogh plan contributions for owner-employees are based on their earned income, which is not the same for tax purposes as gross salary.
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The benefit provided by a defined benefit Keogh plan for a common-law employee cannot exceed the lesser of $210,000 in 2015 or 100% of salary. Keogh plans are qualified plans established by any unincorporated business entity.
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Which of the following individuals are subject to the Keogh plan rules? I. shareholder-employees II. corporate directors III. owner-employees IV. partners
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II, III, and IV only as they are all treated as self-employed
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SEPs and profit sharing plans are both subject to the 25% limit on deductible employer contributions, the maximum includible compensation limit, and the top-heavy rules. Eligibility requirements are different for a SEP.
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Although Social Security integration is allowed in stock bonus plans, it is not permitted in ESOPs.
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A profit sharing plan can be structured to reward employees for helping to increase company profits. Stock bonus plans are best suited for sharing ownership.
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Integrated ESOPs are prohibited. There is no limit on amounts used to pay interest on ESOP debt. ESOP distributions of employer stock only are not subject to the 20% income tax withholding requirement.
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Option I is incorrect because amending a defined benefit plan into a target plan will result in termination of the defined benefit plan.
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A pension plan is not required to provide a survivor annuity if the plan participant and spouse have been married for less than one year.
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An alternate payee in a QDRO may be a spouse, a former spouse, a child, or another dependent who is recognized by the court order to have rights to a participant's qualified plan benefits.
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