CPC Qualified Plan Compliance & Nondiscrimination Testing

Question 1

Under IRC Section 410(a), what is the maximum age and service requirement a qualified retirement plan may impose before allowing an employee to participate?

Accepted Answer

Age 21 with 1 year of service

Answer

Age 25 with 1 year of service

Answer

Age 21 with 2 years of service

Answer

Age 18 with 6 months of service

Question 2

Which two alternative tests may a qualified plan satisfy to meet the IRC Section 410(b) minimum coverage requirements?

Accepted Answer

Ratio percentage test or average benefit test

Answer

ADP test or ACP test

Answer

Top-heavy test or minimum participation test

Answer

Safe harbor test or benefit parity test

Question 3

Under the ratio percentage test for IRC Section 410(b) coverage, the percentage of NHCEs benefiting must be at least what fraction of the percentage of HCEs benefiting?

Accepted Answer

70%

Answer

50%

Answer

60%

Answer

80%

Question 4

For the 2024 plan year, an employee is classified as a highly compensated employee (HCE) based on compensation from the employer that exceeded what threshold in the prior year?

Accepted Answer

$150,000

Answer

$130,000

Answer

$160,000

Answer

$175,000

Question 5

Which of the following employees may generally be excluded from coverage testing under IRC Section 410(b)?

Accepted Answer

Employees covered by a collective bargaining agreement where retirement benefits were subject to good-faith bargaining

Answer

Part-time employees completing more than 500 hours of service

Answer

Employees who are age 18 but have not yet reached age 21

Answer

All employees with less than 2 years of service regardless of hours worked

Question 6

The average benefit test under IRC Section 410(b) consists of two prongs. Which of the following correctly identifies both prongs?

Accepted Answer

Nondiscriminatory classification and average benefit percentage test

Answer

Minimum participation count and HCE/NHCE benefit ratio

Answer

Ratio percentage and safe harbor comparison

Answer

Coverage ratio and allocation formula nondiscrimination

Question 7

Under the permissive aggregation rules for IRC Section 410(b), when may an employer combine two separate qualified plans for coverage testing purposes?

Accepted Answer

When the aggregated plan would satisfy the applicable coverage tests as if it were a single plan

Answer

Only when both plans are defined contribution plans covering the same employees

Answer

Only when each plan individually passes the ratio percentage test

Answer

When both plans have identical allocation or benefit formulas