AAPA flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Conflict of Interest Disclosure
- A written statement identifying the nature of a conflict, the parties affected, and the mitigation or consent step taken before the client relies on advice.
- Engagement Scope Letter
- A document listing services included and excluded, compensation basis, and termination terms, delivered before work begins.
- Record Retention Standard
- Records are kept for the longer of firm policy or regulator rule; ERISA-related records generally run six years from the filing date.
- Documented Client Instruction
- A dated record of the client's decision, the channel used, and the data relied on, created at the time of the instruction.
- Record Addendum Rule
- Corrections are made by adding a dated note to the file; original entries are retained rather than overwritten or deleted.
- Fact Versus Interpretation Notes
- Meeting documentation separates what the client stated from the adviser's analysis, keeping the record clear about the source of each statement.
- Oral Disclosure Follow-Up
- When a disclosure is explained orally, a written version is delivered afterward so the client has a durable record of the terms.
- Safe Harbor Basic Match Formula
- Employer match of 100% on the first 3% of pay deferred plus 50% on the next 2%, fully vested and exempt from ADP testing.
- Safe Harbor Nonelective Contribution
- A 3% of compensation contribution to all eligible non-highly compensated employees, fully vested and exempt from ADP testing.
- ADP Test Threshold
- An HCE's average deferral percentage may not exceed the greater of 125% of the NHCE average or the NHCE average plus 2 points.
- Top-Heavy Minimum Contribution
- When key employees hold more than 60% of plan balances, non-key employees generally receive a minimum 3% of compensation contribution.
- Cliff Versus Graded Vesting
- Employer nonelective contributions vest on a 3-year cliff or a 2-to-6-year graded schedule; safe harbor contributions vest immediately.
- Compensation Definition Risk
- Plan tests use the document's compensation definition, which may be total pay, W-2 wages, or a plan-specific subset.
- Deferral Limit Aggregation
- The elective deferral limit applies per individual across all plans of one employer, not separately for each plan.
- Annual Additions Limit Scope
- The annual additions limit applies per unrelated employer, so unrelated employers each test their own contributions separately.
- Form 5500 Due Date
- The annual return is due the last day of the seventh month after plan year end; Form 5558 extends it 2.5 months.
- Late Deferral Deposit Correction
- Late deposits are corrected with lost earnings and a Form 5330 excise tax computed on the prohibited transaction amount.
- RMD Start Date Rule
- Required minimum distributions begin April 1 of the year following the later of retirement or reaching the applicable age threshold.
- ERISA Fiduciary Duties
- Fiduciaries owe duties of loyalty, prudence, diversification, adherence to plan documents, and reasonable plan fees.
- Prohibited Transaction Examples
- Self-dealing, conflicts of interest, and certain party-in-interest service arrangements are barred unless a statutory or administrative exemption applies.
- Participant Fee Disclosure Format
- Participant-level fee disclosures follow the 404a-5 format; plan-level service-provider disclosures follow the 408(b)(2) format.
- Remedial Amendment Period
- Plan documents must be amended for law changes within the prescribed remedial amendment period, even if operations already comply.
- Indexed Limit Application
- Contribution limits and testing thresholds are indexed annually; the limit for the contribution's tax year governs.
- Eligibility Service Tracking
- Age and service conditions are applied as written, including break-in-service and rehire rules that can reset or preserve eligibility credit.
- Loan Amortization Review
- Loan administration confirms the amortization schedule, repayment frequency, maximum amount, and default cure window against the plan document.
- Payroll Reconciliation Control
- Each pay period, payroll deferral totals are compared with recordkeeper deposits and trust statement activity to detect discrepancies early.
- Distribution Processing Checklist
- Confirm the eligibility event, spousal consent if required, withholding election, and Form 1099-R coding before releasing a distribution.
- QDIA Default Investment Rule
- Participants with no investment election are placed in a qualified default investment alternative, with required notice and mapping rules applied.
- Blackout Notice Timing
- A blackout period affecting participant-directed investments generally requires notice at least 30 days before the blackout begins.
- Beneficiary Designation Review
- Beneficiary records are reviewed after life events; a valid prior designation controls unless a later valid designation supersedes it.
- Error Correction Sequence
- Correction follows a documented order: identify the error, quantify it, correct it, notify affected parties, and fix the root cause.
- Contribution Limit Year Rule
- The contribution limit applied to a deferral or employer contribution is the limit in effect for that contribution's tax year.