Term
| The process involved in the termination of a qualified plan will vary significantly based on whether the plan is a |
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Definition
| DC plan, a DB exempt from the PBGC, or a DB plan covered by the PBGC |
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Term
| DB plans are covered unless they are exempt, exempt plans are those |
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Definition
| whose participants are only owners and their spouses or are professional service businesses (legal, accountant, medical, actuarial…) with fewer than 25 participants covered by the plan |
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Term
| The purpose of the ____is to provide that when a covered db plan terminated with insufficient assets to cover “insured benefits” participants will receive their insured benefits |
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Definition
| PBGC Pension Benefit Guaranty Corporation |
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Term
| Insured benefits are those that ____________ in based on years covered by the plan; There is also a $____ current maximum monthly benefit limit as well as a requirement that _______________ |
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Definition
| were vested at the time of plan termination subject to a phase; $5400; lump sum options are not insured |
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Term
| All qualified plans must initiate a plan termination by the _____________ adopting a resolution |
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Definition
| directors, partners or owners |
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Term
| For plans covered by the PBGC a filing is required to provide information to the PBGC that either indicates that the plan can terminate under the _________ if sufficient assets or under a ________ if insufficient assets |
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Definition
| standard form; distress termination |
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Term
| For plans covered by the PBGC a filing is required to provide information to the PBGC that either indicates that the plan can terminate under the _________ if sufficient assets or under a ________ if insufficient assets |
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Definition
| standard form; distress termination |
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Term
| Plans subject to the PBGC must also provide participants with _________ indicating how the benefits were determined |
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Definition
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Term
| After the IRS and PBGC approves the terminations, or in the case where no filings are applicable the employer adopts a __________, each plan participants receive _______ to select how they wish their benefits to be distributed as if they terminated employment |
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Definition
| termination resolution; election forms |
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Term
| The excess assets can be reverted to the employer subject to a ___________, be used to increase benefits (must use at least ________) and the reversion tax drops to ___%, or have 25% of the excess transferred to a replacement dc where the reversion tax also drops to ___% |
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Definition
| 50% reversion tax and income tax; 20% of the excess; 20%; 20 |
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Term
| Non qualified plans are not subject to any _________, or other limitations. Non qualified plans however are not provided with the same ____________ as qualified plans |
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Definition
| discrimination testing, coverage requirements; tax advantages (including rollover options) or protections |
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Term
| A ____________ is similar to a 401k without limits, however the employer doesn’t get a tax deduction until the money can actually be paid out to the employee (which must be established at the time the deferral is made and the election to defer compensation must be made prior to the BOY), which is when the employee must include it in income. |
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Definition
| non qualified salary reduction plan |
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Term
| The 3 main types of employer financed non qualified plans are _____________ which may be funded or unfunded |
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Definition
| excess benefit plans, SERPs (supplemental executive retirement plans), and top hat plans |
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Term
| A funded non qualified plan is one where assets are set aside for benefits which could be forfeited however are ___________ |
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Definition
| not available to general creditors |
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Term
| An _____ is merely an agreement between the employer and employee with respect to the payment of future benefits |
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Definition
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Term
| For a funded non qualified plan to not be included in the employee’s income, the benefits must be ________ |
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Definition
| subject to a substantial risk of forfeiture |
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Term
| An ______________ can be either funded or unfunded and is designed to provide benefits to all those whom are covered by a qualified plan but have their benefits limited by either the IRS benefit, contribution, or compensation limits |
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Definition
| excess benefit plan (financed by the employer) |
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Term
| A ________ is similar to an excess benefit plan but can be used for benefit purposes aside from making up for benefits not available under qualified plans and is designed to cover only a select group of executives not all those that are losing qualified plan benefits |
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Definition
| SERP (financed by the employer) |
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Term
| A _________ must be unfunded and provides additional benefits to key select executives based on some formula that is unrelated to a plan formula |
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Definition
| top hat plan (employer provided) |
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Term
| A _______ is a funded trust where the assets cannot be used by the employer, however must be available to general creditors |
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Definition
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Term
| _______ are commonly used by non qualified deferred salary reduction agreements. |
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Definition
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Term
| _________ are generally (but not always) subject to very basic ERISA reporting requirements |
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Definition
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Term
| ___________ is a critical concept in understanding when benefits “transfer” from employer to employee. Upon _________ the employee pays tax and the employer gets the deduction. |
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Definition
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