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.
Read the first 7 Employer-Sponsored Retirement Plans flashcards as text
An employee participates in both a 401(k) and a 403(b) plan in the same year. What is the combined employee deferral limit for 2024?
Answer: $23,000 combined across both plans
The $23,000 employee deferral limit for 2024 is an aggregate limit that applies across all 401(k) and 403(b) plans combined.
A plan sponsor adopts a safe harbor 401(k) provision. Which of the following is a qualifying safe harbor employer contribution?
Answer: A nonelective contribution of at least 3% of compensation for all eligible employees
One safe harbor option is a nonelective employer contribution of at least 3% of compensation made for all eligible employees.
Under what circumstances may a participant take a hardship distribution from a 401(k) plan without penalty?
Answer: For an IRS-defined immediate and heavy financial need when no other resources are available
Hardship distributions require an IRS-defined immediate and heavy financial need and that the distribution is necessary to satisfy that need.
Which plan type allows participants to borrow up to 50% of their vested account balance, not to exceed $50,000?
Answer: 401(k) plan
401(k) plans (and other qualified plans) permit loans of the lesser of 50% of the vested balance or $50,000.
A highly compensated employee (HCE) is defined under IRC Section 414(q). Which threshold applies for 2024?
Answer: Earned more than $135,000 in the prior year
For 2024, an HCE is someone who earned more than $150,000 in 2023 or was a 5% owner at any time.
What is the rule of 55 as it relates to qualified plan distributions?
Answer: Participants who separate from service at age 55 or older may take 401(k) distributions penalty-free
The Rule of 55 allows penalty-free withdrawals from a 401(k) if you separate from service in or after the year you turn 55.
In a profit-sharing plan, how often must contributions be made?
Answer: At the employer's discretion; there is no fixed contribution schedule
Profit-sharing plan contributions are entirely discretionary; the employer decides the amount and timing each year.