CRPC Employer-Sponsored Retirement Plans 2

Question 1

A 401(k) plan must satisfy the ADP test to ensure nondiscrimination. What does ADP stand for?

Accepted Answer

Actual Deferral Percentage

Answer

ADP stands for Actual Deferral Percentage, which compares the average deferral rates of HCEs to NHCEs.

Question 2

Which type of employer-sponsored plan requires the employer to make contributions regardless of company profitability?

Accepted Answer

Money purchase pension plan

Answer

Money purchase pension plans require fixed, mandatory employer contributions regardless of profits, unlike profit-sharing plans.

Question 3

Under ERISA, what is the maximum number of years an employer can require for cliff vesting in a defined contribution plan?

Accepted Answer

3 years

Answer

ERISA requires 100% cliff vesting no later than 3 years of service for defined contribution plans.

Question 4

An employer sponsors a SIMPLE IRA. In 2024, what is the maximum employee salary deferral contribution?

Accepted Answer

$16,000

Answer

The 2024 SIMPLE IRA employee deferral limit is $16,000, with a $3,500 catch-up for those 50 and older.

Question 5

A top-heavy plan must provide a minimum employer contribution for non-key employees. What is that minimum as a percentage of compensation?

Accepted Answer

3%

Answer

Top-heavy plans must provide at least a 3% minimum employer contribution for non-key employees.

CRPC - Chartered Retirement Planning Counselor Practice Test