CRPC Employer-Sponsored Retirement Plans 3

Question 1

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?

Accepted Answer

$23,000 combined across both plans

Answer

The $23,000 employee deferral limit for 2024 is an aggregate limit that applies across all 401(k) and 403(b) plans combined.

Question 2

A plan sponsor adopts a safe harbor 401(k) provision. Which of the following is a qualifying safe harbor employer contribution?

Accepted Answer

A nonelective contribution of at least 3% of compensation for all eligible employees

Answer

One safe harbor option is a nonelective employer contribution of at least 3% of compensation made for all eligible employees.

Question 3

Under what circumstances may a participant take a hardship distribution from a 401(k) plan without penalty?

Accepted Answer

For an IRS-defined immediate and heavy financial need when no other resources are available

Answer

Hardship distributions require an IRS-defined immediate and heavy financial need and that the distribution is necessary to satisfy that need.

Question 4

Which plan type allows participants to borrow up to 50% of their vested account balance, not to exceed $50,000?

Accepted Answer

401(k) plan

Answer

401(k) plans (and other qualified plans) permit loans of the lesser of 50% of the vested balance or $50,000.

Question 5

A highly compensated employee (HCE) is defined under IRC Section 414(q). Which threshold applies for 2024?

Accepted Answer

Earned more than $135,000 in the prior year

Answer

For 2024, an HCE is someone who earned more than $150,000 in 2023 or was a 5% owner at any time.

CRPC - Chartered Retirement Planning Counselor Practice Test