Qualified Retirement Plans by

Qualified Retirement Plans by https://padlet.com/a02316377/studyguide en-us 2022-04-10 13:53:59 UTC 2026-03-16 20:47:07 UTC hello@padlet.com https://www.heckwealthmanagement.com/wp-content/uploads/2020/07/retirement-ahead-road-sign-e1595016926933.jpg Retirement Plans: Not Qualified a02316377 https://padlet.com/a02316377/studyguide/wish/2138021781 2022-04-10 14:12:05 UTC https://padlet.com/a02316377/studyguide/wish/2138021781 Simplified Employee Pension (SEP) a02316377 https://padlet.com/a02316377/studyguide/wish/2138033872 Characteristics: pension plan for employers/owners to set aside retirement funds for themselves & their employees
Key Benefits: minimal establishment costs, plans available to firms of all sizes, employee is 100% vested in contributions
Disadvantages: employer contributions must be equal and given to every employee indiscriminately, only employer permitted to contribute

]]> 2022-04-10 14:30:53 UTC https://padlet.com/a02316377/studyguide/wish/2138033872 Retirement Plan Categories & Classification a02316377 https://padlet.com/a02316377/studyguide/wish/2138037287 2022-04-10 14:37:01 UTC https://padlet.com/a02316377/studyguide/wish/2138037287 Money Purchase Pension Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138039216 Characteristics: NO ACTUARY separated accounts, mandatory funding (specified by plan document), testing required to prevent discrimination favoring HCE
Benefits: favors younger employees, 25% income contribution limit capped at $58000, additional concurrent plans allowed, new plans uncommon following EGTERRA 2001, no in-service w/d
Forfeitures: offset plan costs or allocated to participants
Investment Risk Holder: employee
Vesting: participant’s accrued benefit]]> 2022-04-10 14:40:25 UTC https://padlet.com/a02316377/studyguide/wish/2138039216 Individual Retirement Account (IRA) a02316377 https://padlet.com/a02316377/studyguide/wish/2138039286 Characteristics: $6000 annual contribution limit with 50-year old catchup=$1000, prior year contribution allowed until tax deadline
Benefits: Traditional IRA contributions may qualify for deduction, tax-deferred contributions, no administrative costs, flexible investment options dependent on custodian, qualified early distribution options
Disadvantages: No ERISA application, SS integration prohibited, smaller contribution limits, earnings taxed at retirement (non-Roth), deductibility restrictions regarding concurrent retirement plans, 6% excise tax on excess contributions, 10% early withdrawal penalty
Unique Features: Roth option available (after-tax contribution & qualified earnings distributions are tax-free)

]]> 2022-04-10 14:40:32 UTC https://padlet.com/a02316377/studyguide/wish/2138039286 Employee Stock Ownership Plan (ESOP) a02316377 https://padlet.com/a02316377/studyguide/wish/2138039537 Characteristics: defined contribution stock bonus plan, allocations of employer stock to participants (transfer of equity)
Key Benefits: employees become owners, employees vested in firm's performance and growth
Disadvantages: SS integration prohibited, retirement portfolio performance directly correlated to firm's performance]]> 2022-04-10 14:41:02 UTC https://padlet.com/a02316377/studyguide/wish/2138039537 Cash Balance Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138042715 Characteristics: requires annual actuarial assessment, individual "hypothetical" accounts, mandatory funding (pay credit & interest credit), PBGC protection, credit for prior service, Social Security integration, age & service based higher contributions
Disadvantages: no in-service w/d, actuary costs (but less than DB pension)
Forfeitures: offset plan costs only
Investment Risk Holder: employer
Optimal Candidate: employees of large companies, business owners
Vesting: 3-year cliff formula or equivalent

]]> 2022-04-10 14:46:16 UTC https://padlet.com/a02316377/studyguide/wish/2138042715 Target Benefit Pension Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138043121 Characteristics: one-time actuary requirement (plan inception), mandatory funding (specified by plan document), 10% employer securities limit, required joint/survivor annuity, mandatory diversified investment options (3 minimum options)
Benefits: SS integration (excess only), favors older employees, monthly retirement payment to employee
Disadvantages: no PBGC insurance, employee carries investment risk, no in-service w/d
Unique Features: age-based contributions
Forfeitures: offset plan costs or allocated to participants
Investment Risk Holder: employee
Vesting: participant’s accrued benefit]]> 2022-04-10 14:47:04 UTC https://padlet.com/a02316377/studyguide/wish/2138043121 Stock Bonus Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138043293 Characteristics: defined contribution, employer contributes stock (options), contributions are discretionary, substantial, & recurring, nondiscriminatory plan allocations,
Key Benefits: participants retain passthrough voting rights, right to demand employer securities for distributions, employer stock contributions are tax-deductible, participant has vested interest in firm's performance
Disadvantages: risk of undiversified portfolio, put option may create cashflow issue for employer, valuation costs employer-carried & incurred at contribution
Unique Features: is a put option to employer]]> 2022-04-10 14:47:14 UTC https://padlet.com/a02316377/studyguide/wish/2138043293 Defined Benefit Pension Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138043556 Characteristics: requires annual actuarial assessment, commingled account, 10% limit on employer securities, life insurance rules,
Key Benefits: PBGC protection, Social Security integration, credit for prior service,
Disadvantages: administrative costs, no in-service w/d
Forfeitures: offset plan costs only
Investment Risk Holder: employer]]> 2022-04-10 14:47:32 UTC https://padlet.com/a02316377/studyguide/wish/2138043556 Pension Plans a02316377 https://padlet.com/a02316377/studyguide/wish/2138050586 2022-04-10 14:59:01 UTC https://padlet.com/a02316377/studyguide/wish/2138050586 Profit Sharing Plans a02316377 https://padlet.com/a02316377/studyguide/wish/2138050869 2022-04-10 14:59:33 UTC https://padlet.com/a02316377/studyguide/wish/2138050869 Defined Benefit Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138053031 2022-04-10 15:03:19 UTC https://padlet.com/a02316377/studyguide/wish/2138053031 LIMITATIONS | 2022 a02316377 https://padlet.com/a02316377/studyguide/wish/2138074407 Maximum Annual Compensation taken into account for determining benefits or contributions to a qualified plan
$305,000
Basic Elective Deferral Limitation for 401(k), 403(b) and 457(b) Plans¹$20,500
Catch-up Contribution Limit for Persons Age 50 and older in 401(k), 403(b) or SARSEP Plans
$6,500
Limitation on Annual Additions to a Defined Contribution Plan²$61,000
Limitation on Annual Benefits from a Defined Benefit Plan³$245,000
Highly Compensated Employee Compensation Threshold⁴$135,000
SEP Compensation Threshold
$650
Social Security Taxable Wage Base for Social Security Tax (6.2%)
$147,00
For Medicare Tax (2.35%)
No Limit

Health Savings Accounts:
• Individual Contribution Limit $3,650
• Family Contribution Limit $7,300
• Catch-Up Contributions $1,000

Health Flexible Spending Accounts⁵$2,850

Key Employees
0fficers or owners of your business who at any time during the year before your testing date were:

Officers making over $200,000 for 2022 and $185,000 for 2020-2021 (adjusted annually for inflation);
Business owners holding more than 5% of the stock or capital, or
Owners earning over $150,000 (not adjusted for inflation) and holding more than 1%.

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^{1 This limit and the catch-up limit also apply to Roth (after-tax) contributions under 401(k) and 403(b) plans that permit such contributions.
2 In no event may annual additions exceed 100% of a participant’s compensation.
3 In no event may a participant’s annual benefit exceed 100% of the participant’s average compensation for the participant’s high three years.
4 Generally, an employee is considered “highly compensated” if the employee:
(a) was a five-percent owner of the employer at any time during the current or preceding year; or
(b) received compensation from the employer in the preceding year of more than the applicable dollar limit for that year.
5 This limit applies only to voluntary employee salary reduction (pre-tax) contributions.}

]]> 2022-04-10 15:42:48 UTC https://padlet.com/a02316377/studyguide/wish/2138074407 Defined Contribution Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138084964 2022-04-10 16:02:17 UTC https://padlet.com/a02316377/studyguide/wish/2138084964 Simple Plan (Savings Incentive Match Plans for Employees) a02316377 https://padlet.com/a02316377/studyguide/wish/2138087421 Characteristics: retirement plan for small employers, elective employee deferred contributions, must be a calendar plan
Key Benefits: no hassle to establish, easy to maintain and manage, tax advantages (similar to qualified plans) for both employer & employee
Disadvantages: SS integration prohibited, restricted to small employers only, concurrent qualified plan participation is prohibited, taxed at retirement
Unique Features: plans options are SIMPLE IRA or (rarely established) SIMPLE 401(k)
Vesting: participant is 100% vested in all contributions

]]> 2022-04-10 16:06:55 UTC https://padlet.com/a02316377/studyguide/wish/2138087421 401(k) Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138087468 Characteristics: safe harbor 401(k) plan option very common, normal & early qualifying distributions allowed, CODA integration, employer contributions permitted
Key Benefits: plan document may permit loans, QACA established in 401(k) & SIMPLE IRA after 12/31/19 qualifies small employer for three years of tax credits, Roth option available per plan document
Disadvantages: SS integration prohibited, pre-tax contributions are taxed alongside earnings when distributed, RMD at age 70 1/2 or 72
Unique Features: QACA employer option (auto enroll)
Investment Risk Holder: employee
Vesting: employer contributions in safe harbor=100% vested, QACA=2-year cliff, ]]> 2022-04-10 16:06:59 UTC https://padlet.com/a02316377/studyguide/wish/2138087468 Profit Sharing Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138087497 Characteristics: nondiscriminatory plan, pass annual test requirement, discretionary employer contributions, formula method to calculate contributions, firm profitability not required
Key Benefits: additional concurrent retirement plans allowed, suitable for all firm sizes, no obligation to contribute benefits employer cash flow volatility

]]> 2022-04-10 16:07:03 UTC https://padlet.com/a02316377/studyguide/wish/2138087497 Thrift Savings Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138087521 Characteristics: not a qualified plan, similar limits as 401(k), contributions are after-tax, earning grow tax-deferred, employer and employee can contribute
Unique Features: savings & investment plan for federal employees, uniformed servicemembers, & Ready Reserve
Benefits: flexible rollovers, Roth option available, rollover permitted to 401(k)
Disadvantages: only 6 plans available to select

]]> 2022-04-10 16:07:05 UTC https://padlet.com/a02316377/studyguide/wish/2138087521 New Comparability Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138087540 Characteristics: higher employer contributions to key employees,
Key Benefits: employers allowed to contribute different amounts to different employees, discrimination of non-HCE prohibited, employer flexibility, employees incentivized to perform
Disadvantages: dissatisfied employees unlikely to commit long-term because of smaller employer contributions

]]> 2022-04-10 16:07:08 UTC https://padlet.com/a02316377/studyguide/wish/2138087540 457 Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138087568 Characteristics: 457(b) eligible, 457(f) ineligible, nonqualified deferred compensation (eligible tax-exempt firms & government organizations), public government plans include all eligible employees, private tax-exempt plans for HCE/management, employee elective tax-deferred earnings, 3-year catch-up contributions prior to retirement age
Disadvantages: SS integration prohibited, typically only employee contributes, funds are not guaranteed
Unique Features: public plans: one of two catch-up options allowed & contributions protected by trust, private plans: one catch-up options & contributions not protected by trust, employer pays taxes today with future deduction, is a source of future income
Investment Risk Holder: employee
Eligible Tax-Exempt Entities: Trade Associations, Religious Organizations (not churches), Private Hospitals, Rural Electric Cooperatives, Farmers’ Cooperatives, Private Schools, Labor Unions, Charitable Organizations
Eligible Government Entities: States, Political subdivisions of States, State Agencies
Ineligible 457 Plan Contributions:
Employees defer salary much like a traditional deferred compensation plan:

•No annual limit

•Only highly compensated or key employees

•Contributions are NOT protected by trust

•No catch-up contributions

•No rollovers

]]> 2022-04-10 16:07:11 UTC https://padlet.com/a02316377/studyguide/wish/2138087568 403(b) Plan (tax-sheltered annuity) a02316377 https://padlet.com/a02316377/studyguide/wish/2138088070 Characteristics: plan for public schools, educational organizations, and tax-exempt orgs (IRC 501(c)(3),
distribution options required-Preretirement Joint and Survivor Annuity & Qualified Joint and Survivor (QJSA), loans are permitted (similar rules to 401(k)), optional employer contributions, taxation at retirement

Disadvantages: SS integration prohibited, ERISA application-only select organization types that also meet specific standards, limited 403(b) investment options (insurance annuities & mutual funds only)
Unique Features: participant eligibility requirements are specific, 15-year catch-up contributions,
Investment Risk Holder: employee
Vesting: employer contributions may have vesting requirements

]]> 2022-04-10 16:08:04 UTC https://padlet.com/a02316377/studyguide/wish/2138088070 Age-Based Profit Sharing Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138088146 Characteristics: age-based employer contributions, defined contributions
Key Benefits: older employees receive optimum benefit from maximum employer contributions
Disadvantages: retaining young talent can be a challenge, dissatisfaction among younger employees]]> 2022-04-10 16:08:07 UTC https://padlet.com/a02316377/studyguide/wish/2138088146 Defined Contribution Plan a02316377 https://padlet.com/a02316377/studyguide/wish/2138486124 2022-04-11 02:01:59 UTC https://padlet.com/a02316377/studyguide/wish/2138486124 SARSEP (Salary Reduction Simplified Employee Pension) a02316377 https://padlet.com/a02316377/studyguide/wish/2141821576 Characteristics: auto-deduction from salary, similar to Traditional IRA plan with many identical rules
Key Benefits: pre-tax employee contributions, suitable for smaller firms
Disadvantages: SS integration prohibited, employer contributions available to firms with fewer than 25 employees, requires management with additional costs
Unique Features: defunct & obsolete

]]> 2022-04-13 02:57:48 UTC https://padlet.com/a02316377/studyguide/wish/2141821576 *Small Employer* a02316377 https://padlet.com/a02316377/studyguide/wish/2152940009 Employers who have 100 or fewer employees who each earned at least $5,000 of compensation in the preceding calendar year.]]> 2022-04-22 02:01:51 UTC https://padlet.com/a02316377/studyguide/wish/2152940009 SIMPLE (additional details) a02316377 https://padlet.com/a02316377/studyguide/wish/2152947948
Employee Elective Deferrals

Maximum $13,500 (2021), plus $3,000 (2021) as catch-up contribution for those age 50 and over

Employer Contributions

Employer Matching Contributions

•Dollar-for-dollar match up to 3% of compensation

§May be reduced under special circumstances

2% Nonelective Employer Contributions

•2% of compensation contribution to each eligible employee

Contributions
•Tax deductible

•Tax-free growth

•Employer contribution must be made by the due date of the employer’s income tax return filing deadline (including extensions)

•Employee deferral contributions are subject to payroll taxes

Withdrawals & Distributions
•Ordinary income to recipient

•May be rolled over to an IRA or other qualified plan

•May be subject to early withdrawal penalties

•25%, rather than 10%, penalty if the withdrawal is completed within the first two years of the employee’s participation in the plan

•Subject to IRA early withdrawal exclusions

SIMPLE 401(k)
•Rarely established
• Participant can request loans

]]> 2022-04-22 02:08:49 UTC https://padlet.com/a02316377/studyguide/wish/2152947948 Other Retirement Plans a02316377 https://padlet.com/a02316377/studyguide/wish/2153111309 2022-04-22 04:55:03 UTC https://padlet.com/a02316377/studyguide/wish/2153111309 a02316377 https://padlet.com/a02316377/studyguide/wish/2563840716 2023-04-22 07:39:28 UTC https://padlet.com/a02316377/studyguide/wish/2563840716 Retirement Plans: Qualified a02316377 https://padlet.com/a02316377/studyguide/wish/2563847277 2023-04-22 07:57:48 UTC https://padlet.com/a02316377/studyguide/wish/2563847277 Additional Retirement Plans a02316377 https://padlet.com/a02316377/studyguide/wish/2563848745 2023-04-22 08:02:31 UTC https://padlet.com/a02316377/studyguide/wish/2563848745