C-ELBW flashcards
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- ERISA §404(a)(1) duties
- Five fiduciary standards: exclusive purpose, prudence, diversification, adherence to plan documents, and reasonableness of fees and expenses.
- ERISA party-in-interest
- A person with a relationship to the plan (fiduciary, service provider, employer, employee organization) whose transactions with the plan are restricted under ERISA §406(a).
- ADP test formula
- HCE average deferral percentage may exceed NHCE ADP by at most 2 percentage points if NHCE ADP is 2% or less, or 1.25 times if greater.
- Top-heavy plan threshold
- A plan is top-heavy when key employee account balances exceed 60% of total plan balances, triggering a 3% minimum contribution for non-key employees.
- COBRA election period
- Qualified beneficiaries have 60 days after the later of coverage loss or notice to elect continuation coverage, and premiums may be charged up to 102%.
- HIPAA creditable coverage
- Prior health coverage reduces or eliminates a preexisting-condition exclusion period; creditable coverage must be certified to the new plan.
- Form 5500 due date
- Calendar-year plans must file by July 31 (7th month after plan year end); Form 5558 provides an automatic 2½-month extension.
- SPD 120-day rule
- The summary plan description must be furnished within 120 days after the plan is established and within 90 days after a material modification.
- §409A payment events
- Permissible distribution triggers are separation from service, disability, death, specified time, change in control, or unforeseeable emergency.
- §409A 20% additional tax
- A §409A violation causes immediate income inclusion plus a 20% additional tax and interest at the underpayment rate plus 1%.
- §280G base amount
- The base amount is the disqualified individual's average annual compensation over the 5 years preceding the change in control.
- §162(m) covered employee
- Post-TCJA, the CEO, CFO, and three other highest-paid employees; once covered, the status is permanent.
- §125 cafeteria plan
- A written plan allowing employees to choose between cash and qualified benefits; elections are irrevocable absent a permitted status change.
- §79 group-term life
- Employer-paid group-term life insurance up to $50,000 is excludable from income; excess coverage is taxed using Table I rates.
- §72(t) early distribution tax
- Distributions before age 59½ are subject to a 10% additional tax unless an exception (disability, death, QDRO, separation at 55) applies.
- Disability claim timeline
- Initial disability claim determination within 45 days with two 30-day extensions; appeal decided within 45 days with one 45-day extension.
- ERISA §502(a)(1)(B)
- A participant may sue to recover benefits due under the plan, enforce rights, or clarify the right to future benefits under the plan terms.
- ERISA §413 limitations
- Fiduciary breach actions must be filed within 6 years of the breach, or 3 years after actual knowledge, with a 6-year cap for fraud.
- Complete withdrawal
- Under ERISA §4201, an employer permanently ceases to have an obligation to contribute or permanently ceases covered operations.
- Withdrawal liability arbitration
- ERISA §4221 requires arbitration initiated within 60 days of the plan's response to a review request; arbitration is the exclusive remedy.
- Presumptive allocation method
- ERISA §4211 default method allocating unfunded vested benefits based on contributions in the 5 plan years ending before withdrawal.
- Exclusive purpose rule
- ERISA §404(a)(1)(A) requires fiduciaries to act solely in participants' interest and for the exclusive purpose of benefits and reasonable expenses.
- §4975 prohibited transaction tax
- A 15% excise tax applies annually to the amount involved in a prohibited transaction, rising to 100% if not corrected within the taxable period.
- §408(b)(2) disclosure
- Covered service providers must disclose direct and indirect compensation, fiduciary status, and related-party relationships in writing to plan fiduciaries.
- EPCRS self-correction
- SCP allows correction of operational failures without IRS involvement if the plan has established procedures and the failure is timely corrected.
- VCP user fee
- Voluntary Correction Program requires a compliance statement and user fee based on plan assets or participant count; IRS issues a compliance statement.
- Late deposit safe harbor
- Participant deferrals should be deposited by the 15th business day of the following month; the 7th business day is a DOL safe harbor for large plans.
- SECURE 2.0 auto-enrollment
- New 401(k) and 403(b) plans established after December 29, 2022 must automatically enroll eligible employees at 3%, escalating 1% per year to 10%-15%.
- Roth catch-up mandate
- SECURE 2.0 §603 requires catch-up contributions to be Roth for employees with prior-year wages over $145,000 (indexed), effective 2026.
- 529-to-Roth rollover
- SECURE 2.0 §601 permits up to $35,000 lifetime rollover from a 15-year-old 529 plan to a Roth IRA, subject to annual contribution limits.
- Minimum age and service
- ERISA §202 permits a maximum eligibility requirement of age 21 and one year of service (1,000 hours); two years requires immediate 100% vesting.
- RMD age under SECURE 2.0
- Required minimum distributions begin at age 73 for those reaching that age after 2022, rising to age 75 in 2033.