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32 Cards in this Set

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What is ERISA


sets standards for retirement plans


protects pension funds


only to private employers

Under ERISA, a retirement plan can qualify for what types of tax advantages?


1. employers deduct contributions


2. Employees are NOT subject to tax on annual earnings


3. No tax is due until distributions

A qualified plan means it must meet which 4 ERISA standards?


1.Non-discrimination rules


2. Vesting


3. Funding requirements


4. Fiduciary responsibilities

Contributions to qualified plans are __________ whether they come from employer or employee

PRE-tax

Earnings in a qualified plan grow ________

tax deferred

If an employee fails to take sufficient distributions from a qualified plan after age 70 1/2, how much will be charged in excise tax?

50%

What is a defined benefit plan?


benefits it will pay employees upon retirement

what is a defined contribution plan?


contributions the employer will make during the employee's working years


(very similar to a SIMPLE)

Under a non qualified plan, contributions are __________ and are funded with ________ tax dollars

contributions are not deductible and are funded with after tax dollars

describe a deferred compensation plan?


put off bonus, compensation and defer until retirement


(good for high earners)

what are section 457 plans?

non qualified, deferred-compensation plan for government employees

what is a money purchase pension plan


employer contributes whether or not it had profits


PENSION PLAN


annual contributions


deposits and earnings

profit sharing plans are required to contribute every year

FALSE!

for a money purchase plan and a profit sharing plan, what are the annual limits?

$53,000 or 100% of compensation

what is an important feature of a 401k plan?

matching contributions

What is the max limit of a loan on a 401k plan?

$50,000

What is the max salary reduction limit to a 401k plan?


$18,000


($6,000 catch up once 50)

what type of money funds a ROTH 401k?

after tax contributions

Can employers make matching contributions to a Roth 401K?

NO

what is a 403b plan?


employer is a non-profit organization


no deductions for contributions


(no individual contractors)


annuities or mutual funds

What is a Keogh (HR-10) Plan?


for self employed individuals


must cover ALL full-time employees who are 21 and 12 months employment

Who can establish a SEP?


corporations, partnerships, or sole proprietors

A SEP is good for _______ employers because?

good for small employers because they are less expensive (part time employees can participate)

the traditional IRA is funded with any _______

non-deductible contribution

what is the maximum annual contribution for a Coverdell (ESA)?

$2,000 per year per child

At what age does the contributions to a ESA cease?


at age 18


(funds used by age 30)

what options does a person with a Coverdell have if they have not used the funds by age 30?


1. roll over to another family member under 30


2. distribute funds within 30 days of 30th bday

Under a 529 plan, what is the max gift an individual can make without tax consequences?

$14,000

For a 529, A special rule permits an election to spread contributions over _______ years, so a taxpayer can make a gift of up to ________ without gift tax consequences.

over 5 years, gift of up to $70,000

With a 529, is there an age limit on taking distributions?

NO

Can the beneficiary of a 529 be changed?

yes at any time without tax consequences

what is the phase-out limit for a Coverdell?

under $220,000 if married and filing jointly