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Who may sponsor a 403(b) plan? 501c3 organizations, public education organizations
When must employees be eligible to defer in a 403b plan? All Ees who are regularly scheduled to work at least 20 hours per week and who contribute more than $200 annually. ER may use 1000 hours per year under regulations to exclude based on hours worked. Not applicable to churches/QCCOs.
What types of 403b plan sponsors are subject, with respect to ER contributions only, to minimum coverage, eligibility and nondiscrim rules? 501c3 orgs only
What is the maximum employer contribution in a 403b plan? Total amount cannot exceed the Ees 415c limit of 100% of comp or 49K (2010/2011)
May governmental employers sponsor a 401k plan? No. Pre-86 gvt 401k plans are grandfathered. Indian tribal gvt sponsors are eligible.
May a 401k plan with immediate vesting of ER contributions require a 2 year initial eligibility period for employee deferrals? No -- this only applies to ER contributions
What is the maximum deductable ER contribution in a 401k plan? For for-profit Ers, deductibility is limited to 25% of aggregate EE comp.
For 2010/2011 tax years,what is the maximum deferral limit in 403b plans? In 401k plans? 16500 (not including catchup rules)
What catch-up contribution rules apply to 403b plans in 2010/11? Age 50+ have increased deferral limit of 5500. certain Ees with 15_ yrs of svc have 3K increase option.
What distribution restrictions apply to 403b accounts of post-2008 employer contribution accounts? Distribution of ER contributions restricted until termination, stated age or prior stated event.
Under what circumstances might an EE's 403b account be subject to no distribution restrictions? Pre89 values in annuities there are no restrictions.
In annuity contracts, EE account values are subject to distribution restrictions for account values after what date? Post 88 EE acct values are subject to distribution restrictions
When may EE contributions be distributed for a recently created 403b annuity contract? Upon death, disability, age 59.5, termination, financial hardship.
What distribution restrictions apply to pre-89 values in a custodial 403b account? These have always been subject to distribution restrictions - Upon death, disability, age 59.5, termination, financial hardship.
When must distributions begin for 403b post 88 assets? Later of 70.5 or termination.
Certain 403b assets are subject to a different min distribution requirement than the 401k standard. What are they? Pre 89 values must be distributed the later of age 75 or termination. Otherwise, values must be distributed the later of age 70.5 or termination.
What rule applies to timing of contribution deposits into the plan of EE deferrals for 403b and 401k plans? As soon as practical but no later than 15 business days following the end of the month in which the deferral.
What is the rule that applies to timing of employer contributions into a 403b or 401k plan? Within 8.5 mths of the end of the plan year or when the return is filed, whichever is first.
What are the 5500 reqmts for 403b plans with er contributions? Form 5500 with schedules and audits for plan yrs beginning 2009.
Are 403b plans for 3121w church plans subject to nondiscrim testing of ER contributions? No.
Must 403b plans with er contributions provide a summary plan description to participants? Yes.
Are 403b plans with er contributions subject to top heavy testing? No.
True/False - NHCE deferral rates may limit the deferral rates available to HCEs in a 403b plan False - not subject to adp.
What IRS approval process applies to 403b model plans? No approval process is available. There is not yet any process for plan sponsors to rely on their plan document due to IRS approval.
Is IRS approval available for plan amendments in a 403b plan. There is no process for filing plan amendments with the IRS.
Why would one assert that 401k sponsors as a rule have more control over plan assets than a 403b plan? more info in trusteed plan than 403(b) with individual contracts. trustees/ plan administrators simplify the ER role in the day-to-day administration of a the plan, it is easier for an ER to evaluate/control plan in 401(k) than 403(b) .
True/False: The final regulations authorize distributions as part of the termination of a 403(b) plan True
A defined contribution plan is a qualified plan that establishes separate accounts for each participant under a trust. What code section is it qualified under? 401(a)
A defined contribution plan is a qualified 401(a) plan whose assets are protected under a trust. Within the trust, are there separate accounts for each participant? Yes.
IRC 415 treats 403b plans as owned by ? The employee
Generally, if employees participate in a 403(b) program and another defined contribution plan, each plan will have separate 415(c) limits unless what? the employee owns or controls more than 50% of the employer.
What happens to non-vested assets when a profit sharing and money purchase plans becomes terminated. all accounts become fully vested upon termination of the plan.
True/False: Subject to the terms of the plan document, distributions may be made from a money purchase plan for any reason after at least two years of participation in the plan. False. This is true for profit sharing plans.
May distributions be paid from profit sharing plans upon plan termination? Money purchase plans? Yes.
How must benefits from a money purchase plan be paid? must be paid out as a JSA for married participants and as a life annuity for unmarried participants, unless the EE (and spouse, if married) elects an optional form of distribution.
May distributions be paid from profit sharing plans upon plan termination? Money purchase plans? Yes.
How must benefits from a money purchase plan be paid? must be paid out as a joint and survivor annuity for married participants and as a life annuity for unmarried participants, unless the participant (and spouse, if married) elects an optional form of distribution.
What is a SIMPLE plan? A SIMPLE Plan is a retirement plan that permits all eligible employees to make pre-tax contributions to a specified limit but the dollar limit is lower than other types of plans
Can the sponsor have a money purchase and a SIMPLE plan? A SIMPLE Plan must be the only plan that an employer offers.
What is A Simplified Employee Plan (SEP)? a type of defined contribution plan that is funded exclusively with employer contributions.
Can a SEP plan be terminated by the sponsor? If a SEP becomes unsatisfactory to the employer, termination is very easy and no IRS or DOL filings are necessary.
What are the gvmt reporting rqmts for SEP plans? If the employer uses the IRS Form 5305-SEP, all of the reporting and disclosure requirements can be met by giving each participant a copy of the executed Form 5305-SEP. an annual statement of ER contr to all Ees.
Can the ER contribution to a SEP be intergrated with SS? All contributions to a SEP must bear a uniform relationship to the comp of each eligible ee (unless the employer uses a prototype SEP document that allows for a contribution formula that is integrated with social security).
What is the vesting rqmt in SEP plan? Immediate vesting.
Can Ees take loans from a SEP plan? No.
What must a sponsor do before modifying or customizing a SIMPLE plan? These plans may not be modified, customized or amended in any way.
What is the age 50+ catchup limit in SIMPLE plans and how does it compare to the limit in other types of plans? 2500 versus 5000 for other plans like 401ks.
What percentage of compensation can be contributed in SIMPLE plans 25% (was lower before but EGTRRA changed this.
contributions to SIMPLE Plans by employers are limited to what? employers may contribute no more than either the 2% (uniform contribution) or 3% (matching contribution).
any employer that grows beyond the ___ X employees___ will no longer be eligible to sponsor a SIMPLE Plan. 100 employees
If an the SIMPLE plan sponsor grows beyond 100 employees, when must the plan be discontinued? There is a two (2) year grace period that permits employers to continue to maintain SIMPLE Plans if they exceed the 100 employee limit. However, once the grace period has ended, such employers must discontinue their SIMPLE Plans.
May SIMPLE plans be set up for EE deferrals only (no employer contributions)? No. In a SIMPLE Plan, the employer must also make a contribution to the SIMPLE Plan. The employer can elect to make either 1.00 for $1.00 matching contribution up to 3% of pay or a contribution equal to 2% of pay for all eligible employees.
What employees must be included in a SIMPLE plan? all employees who have earned at least $5,000 in any two (2) preceding years, if expected to earn at least $5,000 in the current year, must be included in the plan. (except union ees)
What coverage and nondiscrim testing applies to SIMPLE plans? there are no nondiscrimination, coverage or participation tests
To whom must SEP contributions be made Ees 21 at year end, has worked 3 out of 5 preceding years, has comp in excess of $550. Nonresident aliens and union may be excluded.
What reporting and disclosure requirements apply to SEP plans? Give Ees to Form 5305-SEP, the form used to adopt the SEP and a written statement from the employer discloses contribution made by the ER for that EE in that year.
How can SIMPLE plans be funded? IRAs or 401k trusts
If employer chooses an IRA to fund the SIMPLE plan, what is the sponsor's fiduciary obligation for investments? If EE selects a different IRA product and moves his simple acct, ER is relieved of fiduciary obligations for selecting the vendor. Otherwise, 1 yr later ER is relieved of liabilities for selecting the IRA>
What is the minimum ER contribution to a SEP? The employer's contribution to a SEP is completely discretionary so long as the contribution is uniform rate
Can an ER with more than 100 Ees start a SEP plan? Yes. The 100 EE limit pertains to SIMPLEs, not SEPs.
What is the 50+ catchup limit for IRAs? $1000.
Can 403b participants invest in treasury bills? No. No treasury bills or savings accts are allowed in 403b plans.
What is the maximum deferral to a traditional IRA for 2010 and 2011? $5,000 plus the $1000 50+ catchup.
What is the maximum contribution to a coverdell education savings account $2000. This limit is separate from other IRAs.
What is the maximum age limit for traditional IRAs? For Roth IRAs? Traditional - 70 1/2. Roth - any age.
Can a retiree make contributions to a traditional or Roth IRA? Must have earned income.
When can contributions to a traditional IRA be deducted from income? If not an active participant in qualified plan. Otherwise, deductability based on AGI limit.
Can you contribute to a traditional IRA while being covered by a 401k plan? Yes. Deductability only available for income below specified AGI limits.
True/False: Only accountholders with AGI less than 100K can rollover from regular IRA to Roth IRA False: Prior to 2010, this was true. However, that limitation was removed in 2010 and there is no longer any income limitation for Roth IRA conversions.
What is the holding period applicable to Roth IRAs? 5 years.
In addition to the holding periods, what purpose test applies to distributions from Roth IRAs to avoid taxation? Death, disability, age 59.5, first time home purchase (up to 10K)
How is principal vs interest distributed from a Roth IRA? Even if the purpose test is not satisfied, amounts withdrawn from a Roth IRA are treated first as a return of principal which can mean no income taxation upon the withdrawal.
What happens if the person distributes from Roth IRA converted from a regular Roth IRA prior to holding period? 10% penalty - however, it does not apply if the account holder is age 59½ or has another event that would result in waiver of that penalty tax.
Can EE contribute to Roth IRA after 70 1/2? Traditional IRA? Yes in Roth IRA; No in traditional IRA.
What process is required to convert non-Roth assets in a 403b, 401k, 401a, gvt 457b, traditional IRA into a Roth IRA? it is no longer necessary to rollover from a qualified plan, a 403(b) plan, or a governmental 457(b) plan into a traditional IRA and then convert the IRA into a Roth IRA.
Why might one assert that fiduciary responsibilities in a 403b plan are easier than with a 401k plan? Because of funding vehicle rules & EE role in selecting the investments, ERs may have reduced performance liability for investments. 403(b) Model plans can use provisions that are available to other plan sponsors, such as 404(c) relief and QDIAs.
Can MRDs be delayed in traditional IRA if EE is still working? Roth IRAs? No. must begin no later than April 1 of the calendar year following the year in which attains age 70½ or by the last day of the year following the date of death, if sooner. No MRDs in Roth IRA.
Created by: alkstudy