CRPS flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

SIMPLE IRA eligibility

An employer with 100 or fewer employees that sponsors no other qualified plan may adopt a SIMPLE IRA, funding either a 3% matching contribution or a 2% nonelective contribution.

Top-heavy minimum contribution

A top-heavy defined contribution plan must credit each non-key employee at least 3% of compensation, unless a comparable defined benefit minimum covers that employee under a combination plan.

Controlled group aggregation

Under Code Sections 414(b) and 414(c), businesses connected by 80% or more common ownership are treated as one employer for coverage, nondiscrimination, top-heavy, and contribution limit purposes.

Gateway minimum

In a cross-tested profit sharing plan, each non-highly compensated employee must receive an allocation of at least one-third of the highest HCE allocation rate, or at least 5% of compensation.

Cash balance plan

A defined benefit plan that states each participant's benefit as a hypothetical account with pay credits and interest credits, while still satisfying funding, 415(b), and nondiscrimination testing.

Minimum participation rule

A defined benefit plan must benefit each year at least the lesser of 50 employees or 40% of all employees of the employer, tested on a benefits basis under Section 401(a)(26).

25% deduction limit

Employer contributions to a defined contribution plan are deductible up to 25% of aggregate participant compensation, while elective deferrals fall outside that limit and are deductible when contributed.

403(b) eligible employers

Tax-sheltered annuity plans are available only to 501(c)(3) organizations, public educational institutions, and ministers, and must extend deferral eligibility universally to all employees.

SPD delivery deadline

The summary plan description must be furnished within 120 days after the plan is adopted, and to newly eligible participants within 90 days after they enter the plan.

SMM delivery deadline

A summary of material modifications must be furnished within 210 days after the end of the plan year in which the amendment or change was adopted.

Form 5500 due date

The annual return is due by the last day of the seventh month after the plan year ends, and a timely Form 5558 extends that deadline by two and one-half months.

Fidelity bond requirement

ERISA requires a bond of at least 10% of plan assets, with a $1,000 minimum and a $500,000 maximum, increased to $1,000,000 when the plan holds employer securities.

Safe harbor 401(k) notice

A plan relying on the ADP or ACP safe harbor must give participants written notice at least 30 and no more than 90 days before the beginning of the plan year.

Pre-approved plan restatement cycle

Prototype and volume submitter documents that hold IRS opinion or advisory letters must be restated every six years within the applicable remedial amendment period.

QDIA notice timing

Participants must receive the qualified default investment alternative notice at least 30 days before default enrollment and annually at least 30 days before the start of each plan year.

Interim amendment deadline

A plan must be amended for new law or guidance by the last day of the plan year in which it applies, unless the IRS extends the deadline through remedial amendment relief.

ADP test limits

HCE average deferral percentage may not exceed 1.25 times the NHCE average, or must fall within two percentage points of it and no more than twice it.

Excess deferral refund

Elective deferrals exceeding the 402(g) limit must be distributed with allocable earnings by April 15 of the following year to avoid taxation in both years.

Annual additions limit

Section 415(c) caps annual additions at the lesser of the indexed dollar limit or 100% of compensation, including deferrals, employer contributions, and forfeitures but excluding catch-up.

Top-heavy threshold

A defined contribution plan is top-heavy when key employees hold more than 60% of total account balances, measured as of the last day of the preceding plan year.

Key employee definition

A key employee is a more-than-5% owner, a more-than-1% owner with compensation above the indexed amount, or an officer with compensation above the indexed officer threshold.

Plan loan limit

Loans may not exceed the lesser of $50,000 reduced by the highest outstanding balance in the prior 12 months, or 50% of the vested balance, with a $10,000 floor.

Three-year cliff vesting

Employer nonelective contributions must vest at least as fast as a three-year cliff or a graded schedule reaching 100% within six years, with service counted from date of hire.

EPCRS self-correction

The Self-Correction Program lets a plan sponsor fix certain operational failures without IRS filing or fee when the plan has established practices and correction is timely.

ERISA fiduciary test

A person is a fiduciary to the extent they exercise discretionary authority or control over plan management or assets, or render investment advice for a fee.

3(38) investment manager

A bank, insurer, or registered investment adviser that accepts discretionary authority over plan assets and bears responsibility for the investment decisions it makes for the plan.

404(c) participant direction relief

When participants exercise control over investments and the plan meets broad-range, disclosure, and control requirements, fiduciaries are not liable for resulting participant investment losses.

Prohibited transaction excise tax

A prohibited transaction triggers a 15% excise tax on the disqualified person for each year, escalating to 100% of the amount involved if not corrected timely.

408(b)(2) disclosure

Plan service providers must disclose in writing their services, direct and indirect compensation, and fiduciary status so the sponsor can assess reasonableness of the arrangement.

Co-fiduciary liability

A fiduciary who knows another fiduciary has breached a duty must make reasonable efforts to remedy the breach, or becomes personally liable for that breach.

Prudent person standard

Fiduciaries must act with the care, skill, prudence, and diligence that a knowledgeable person familiar with such matters would use in similar circumstances.

Six-year record retention

ERISA requires fiduciaries to keep records of plan operations, participant data, and supporting documents for at least six years after the related Form 5500 filing date.