Details Title: ASPPA DC-2 Chapter 1 Key Terms Description: ASPPA DC-2 Chapter 1 Key Terms Total Flash Cards: 35 Created: 03/26/2009 05:23:43		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Finance Flashcards
Cards in this set: Term Cash or Deferred Arrangement (CODA) Definition An arrangement that involves an election by an employee between receiving compensation in cash or having compensation deferred to a qualified plan. Term Qualified CODA / 401(k) Arrangement Definition Refers to the cash or deferred arrangement in a qualified plan. Term 401(k) Arrangement / Qualified CODA Definition Refers to the cash or deferred arrangement in a qualified plan Term Salary Reduction Agreement Definition The employee agrees to reduce compensation in exchange for the deferral. Term Elective Deferral Definition Contribution made to a qualified plan under CODA (cash or deferred arrangement) Term One-Time Irrevocable Election Rule Definition Not a cash or deferred arrangement (CODA).  If the election is irrevocable, and is made no later than the time the employee first becomes eligible for any plan maintained by the employer Term Pre-ERISA Money Purchase Plan Definition Plan that was in existence on June 27, 1974 and otherwise satisfies the definition of a pre-ERISA Money Purchase Plan prescribed by IRC 401(k)(6) - requires the plan to limit employer and employee contributions to levels available in 1974 Term Designated Roth Contribution Definition Special type of elective deferral because they are made with after-tax dollars. Term Catch-up Contributions Definition May be made in a 401(k) Plan, Simple 401(k), 403(b), SARSEP, Simple IRA, or 457 Plan.  Deferrals that are in excess of various otherwise applicable limits. ($5,000 in 2009) Term Catch-up Eligible Participant Definition Participant that is 50 years old or older or will turn 50 years old by the end of the calendar year. Term After-Tax Employee Contributions Definition Contributions that are made after taxes.  Contributions that are considered to be annual additions under the 415 that are subject to the 415 limitations that are the lesser of 100% of compensation or $46,000 in 2008. (may change due to cost of living adjustments) They are subject to nondiscrimination testing, ACP testing Term Matching Contributions Definition Employer contributions that are made on account of elective deferrals or after-tax employee contributions. Term Nonelective Contributions Definition Employer contributions to a qualified plan that are not elective deferrals made under the 401(k) arrangement and are not matching contributions. Term Qualified Matching Constributions (QMAC) Definition If a QNEC Qualified Nonelective contribution is allocated in proporation to elective deferrals it constitutes a matching contribution. Term Qualified Nonelective Contribution (QNEC) Definition Contribution that is made by an employer that is 100% vested when made and subject to the same distribution limitations as elective deferrals.  Used to pass the ADP and ACP tests Term Constructive Receipt Principles Definition If a taxpayer is in control of whether to receive taxable compensation or have it deferred. Term Automatic Enrollment Definition The plan provides that as of the plan entry date when the employee is first eligible for the 401(k) plan, the employee is automatically enrolled at a default salary deferrals rate. Term Negative Election or Negative Enrollment Definition The employee need to fill out a form to elect against automatic enrollment. Term Elgible Automatic Contribution Arrangement (EACA) Definition Elective deferral arrangement that: - has option to defer cash to have employer make contributions to the plan -participant treated as made deferral in an uniform % amount until they elect not to or change election -in absence of investment election auot enrolls according to DOL regs. -notice requirements of IRC 414w4 are satisfied Term Qualified Automatic Contribution Arrangement (QACA) Definition is an eligible automatic contribution arrangement (EACA) that satisifies addtional requirments Term Qualified Default Investment Arrangement   Definition Under the PPA if a trustee selects a default fund that meets certain requirements, the default fund will have protection under ERISA 404(c) equialvent to that available when participants select their own funds. Term IRC 401(a) Limit / 402(g) Dollar Limit Definition IRC 401(a)(30) limits the amount of elective deferrals that employee may make to a 401(k) plan in any calendar year.  This limit is the dollar amount under the 401(g) Term IRC 402(g) Dollar Limit / IRC 401(a)(30) Limit Definition IRC 401(a)(30) limits the amount of elective deferrals that an employee may make to a 401(k) plan in any calendar year.  This limit is the dollar amount under the 402(g) Term Excess Deferral Definition Individuals elective deferrals exceed the IRC 402(g) dollar limit Term IRC 415(c) Limit Definition Elective Deferrals are part of the annual addtions that are limited by the IRC 415.  The 415(C) limit on annual addtions is generally the lesser of 100% of compensation or the dollar limit in effect under the IRC 415(c)(1)(a) for the year. Term Plan-imposed Limit Definition 401(k) plan that limits the % that an employee may contribute Term ADP Test Limit Definition The ADP test prescribes a maximum average deferral rate for a group of HCE's who are eligible for the 401(k) arrangement for the plan year Term GAP Period Earnings Definition Earnings for the period form the last day of the calendar year in which the excess deferrals arose to the date of the actual distributions. Term Allocable Earnings Definition Allocable earnings in which the excess deferrals arose..can be positive (gains on excess deferrals) or negative (loss on excess deferrals) Term Uninversal Availability Test Definition Plan is treated as failing to satisfiy IRC 401(a)(4) unless all catch-up eligible pariticipants have the same election rights available to them with respect to catch-up contributions Term Effective Opportunity Definition Catch-up eligible must be notified of his or her right to make these contributions Term True-up Definition Make up the difference between the match already funded and the employer matching contributions to which the pariticpant is entitled under the formula. Term Allocation Formula Definition Determines how the contributions described in the contribution formula will be allocated amoung the participants acounts Term Contribution Formula Definition The plan defines the formula to be used by the employer to determine the amount of the non-elective contributions only Term Permissible Withdrawal Definition A distribution made at the employees election of all contributions made by the automatic enrollment on behalf of the employee.  Must be requested in the first 90 days of participation