Employer-Sponsored Retirement Plans Flashcards
7 cards from real CRPC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
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A 401(k) plan must satisfy the ADP test to ensure nondiscrimination. What does ADP stand for?
Answer: Actual Deferral Percentage
ADP stands for Actual Deferral Percentage, which compares the average deferral rates of HCEs to NHCEs.
Which type of employer-sponsored plan requires the employer to make contributions regardless of company profitability?
Answer: Money purchase pension plan
Money purchase pension plans require fixed, mandatory employer contributions regardless of profits, unlike profit-sharing plans.
Under ERISA, what is the maximum number of years an employer can require for cliff vesting in a defined contribution plan?
Answer: 3 years
ERISA requires 100% cliff vesting no later than 3 years of service for defined contribution plans.
An employer sponsors a SIMPLE IRA. In 2024, what is the maximum employee salary deferral contribution?
Answer: $16,000
The 2024 SIMPLE IRA employee deferral limit is $16,000, with a $3,500 catch-up for those 50 and older.
A top-heavy plan must provide a minimum employer contribution for non-key employees. What is that minimum as a percentage of compensation?
Answer: 3%
Top-heavy plans must provide at least a 3% minimum employer contribution for non-key employees.
Which of the following best describes a 403(b) plan?
Answer: A tax-sheltered annuity plan for employees of public schools and nonprofits
403(b) plans are tax-sheltered annuity plans available to employees of public schools, hospitals, and 501(c)(3) organizations.
What is the primary purpose of the PBGC (Pension Benefit Guaranty Corporation)?
Answer: To insure defined benefit pension plan benefits if a plan terminates
The PBGC insures participants' defined benefit pension benefits up to certain limits if their plan is terminated.