APA cheat sheet

Plan year is the 12-month period on which the plan's records, valuations, and compliance testing are based; it need not match the tax year but often does.

Vesting schedules: 3-year cliff (0% before 3 years, 100% at 3) or 2-to-6-year graded (20% per year beginning year 2) are the maximum permitted for employer-derived benefits.

Accrued benefit for a defined benefit plan must satisfy 133 1/3% rule or the 3% per year rule under IRC 411(b); for cash balance plans the 133 1/3% test applies to pay credits.

Benefit accruals may not be reduced by amendment for benefits already accrued; 411(d)(6) anti-cutback protection applies, with limited exceptions (e.g., 204(h) notice for 411(d)(6)(B) amendments).

A participant's normal retirement age is the earlier of the plan-specified age (not exceeding 65) or the later of age 65 or the 5th anniversary of plan participation.

Annual funding notice must be furnished to participants, beneficiaries, and unions within 120 days of the plan year end (or the Form 5500 due date, including extensions, for small plans).

Summary Annual Report must be distributed within 9 months after the plan year end (2 months after the Form 5500 due date if an extension is used).

For a DB plan, the minimum required contribution equals the target normal cost plus the shortfall amortization installment minus the funding standard carryover balance and prefunding balance.

A plan is 'at-risk' if funded percentage is under 80% (or would be under 80% if the at-risk rules applied); at-risk plans use assumptions reflecting plan termination liability.

ADP test: the average deferral percentage of the HCE group may not exceed the greater of 125% of the NHCE ADP or the lesser of 200% of NHCE ADP or NHCE ADP + 2 percentage points.

ACP test applies the same 125%/200%+2 limits to after-tax and matching contributions; safe harbor 401(k) plans are deemed to pass ADP/ACP.

Top-heavy status exists when key employee account balances (or accrued benefits) exceed 60% of total plan balances; top-heavy plans require a 3% minimum contribution for non-key employees.

401(a)(17) compensation limit: $345,000 for 2024, $350,000 for 2025 (indexed). 402(g) elective deferral limit: $23,000 for 2024, $23,500 for 2025.

415(c) annual additions limit: lesser of 100% of compensation or $69,000 (2024) / $70,000 (2025); 415(b) DB limit is the lesser of 100% of high-3 average compensation or $275,000 (2024) / $280,000 (2025).

Catch-up contributions: $7,500 for ages 50+ (2024 and 2025); SECURE 2.0 adds a higher catch-up ($11,250 in 2025) for ages 60-63 in plans that permit it.

Coverage under 410(b): ratio percentage test (plan covers at least 70% of the NHCE coverage ratio) or average benefit test (nondiscriminatory classification plus average benefit percentage test).

Highly compensated employee: 5% owner at any time during the year or prior year, or compensation above the threshold ($155,000 for 2024, $160,000 for 2025) with top-paid group election available.

Safe harbor 401(k) requires either a 3% nonelective contribution or a 4% match (100% of first 3% plus 50% of next 2%), fully vested, with a required notice (or 30-day plan year notice for nonelective safe harbor).

Required minimum distributions begin April 1 of the year following the later of attainment of applicable age or retirement (for non-5% owners still employed). Applicable age is 73 for those reaching age 72 after 2022 and 75 for those reaching age 74 after 2032.

RMD amount = account balance at prior year-end divided by the Uniform Lifetime Table factor; for a spouse more than 10 years younger, use the Joint and Last Survivor Table.

10% additional tax on early distributions applies before age 59½, with exceptions including separation from service at age 55+, disability, death, QDRO, and substantially equal periodic payments (72(t)).

Direct rollover avoids 20% mandatory withholding; an indirect rollover (paid to the participant) is subject to 20% withholding and must be completed within 60 days to avoid taxation.

Lump-sum distributions may qualify for 10-year averaging (born before 1936) or capital gain treatment; otherwise ordinary income tax applies to the taxable portion.

Net Unrealized Appreciation (NUA): employer securities distributed in kind are taxed at ordinary rates on cost basis; appreciation is taxed at long-term capital gains rates when sold.

SECURE 2.0: age-55 separation exception expanded to public safety workers at 50 and to private-sector firefighters; emergency personal expense distributions up to $1,000 per year are penalty-free.

Required beginning date for a 5% owner is April 1 of the year following the year of attainment of applicable age, regardless of employment status.

QDRO distributions to an alternate payee are taxable to the alternate payee and are exempt from the 10% early distribution tax if the alternate payee is a spouse or former spouse.

ERISA fiduciary duties under 404(a)(1): prudence, loyalty (exclusive benefit), diversification, adherence to plan documents, and reasonableness of fees.

Form 5500 must be filed by the last day of the 7th month after the plan year end (July 31 for calendar-year plans); Form 5558 extends by 2½ months.

Large plans (100+ participants) file Schedule H; small plans file Schedule I; one-participant plans file Form 5500-EZ.

Summary Plan Description must be furnished within 90 days of becoming a participant and within 120 days of a material modification, and updated every 5 years if amended or 10 years if not.

ERISA bond (fidelity bond) is required for 10% of plan assets, minimum $1,000, maximum $500,000 (or $1,000,000 if the plan holds employer securities).

Prohibited transactions under ERISA 406 include sales, leases, loans, and transfers of plan assets between the plan and a party in interest; IRC 4975 imposes excise taxes (15% corrected, 100% uncorrected).

Fiduciary breach: ERISA 409 makes the fiduciary personally liable for restoring losses; ERISA 502(l) civil penalty is 20% of the recovery amount.

Participant-directed 404(c) relief requires at least three diversified investment alternatives, a broad range of options, and disclosure of fees and investment information.

Form 5500 Schedule C reports service provider compensation (direct and indirect) of $5,000 or more; a plan auditor's opinion (Schedule H) is required for large plans.