CER flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- ERISA
- Federal law governing employer-sponsored health and retirement plans; sets fiduciary standards, reporting, and disclosure requirements, but does not mandate specific benefits.
- ACA employer mandate
- Applicable large employers (50+ FTEs) must offer affordable, minimum-value health coverage or face IRS penalties under IRC §4980H.
- COBRA continuation
- Requires employers with 20+ employees to offer continued health coverage after qualifying events; duration 18-36 months; premium up to 102%.
- Health savings account (HSA)
- Tax-advantaged account paired with a high-deductible health plan; contributions are tax-deductible, grow tax-free, and withdrawals for qualified medical expenses are tax-free.
- Mental health parity
- MHPAEA requires that financial requirements and treatment limitations for mental health/substance use disorder benefits be no more restrictive than those for medical/surgical benefits.
- Self-funded health plan
- Employer pays claims directly from its own funds rather than purchasing insurance; often uses stop-loss insurance to cap catastrophic claims.
- Preventive services mandate
- ACA requires non-grandfathered group health plans to cover certain preventive services without cost-sharing, including screenings and vaccinations.
- Formulary tiers
- Cost-sharing structure in pharmacy benefits: generic, preferred brand, non-preferred brand, and specialty drugs, each with different copay or coinsurance levels.
- 401(k) safe harbor
- Plan design (3% nonelective or 4% match) that exempts the plan from ADP/ACP nondiscrimination testing and top-heavy minimum contributions.
- Top-heavy plan
- Plan where key employees' account balances exceed 60% of total plan assets; requires minimum contribution (3% of compensation) or minimum benefit.
- Vesting schedule
- Time-based requirement for employer contributions to become nonforfeitable; cliff (3-year) or graded (2-6 year) schedules; employee deferrals always 100% vested.
- ADP test
- Nondiscrimination test comparing average deferral percentages of highly compensated employees to non-HCEs; corrected via refunds or safe harbor design.
- Required minimum distributions
- Mandatory annual withdrawals from tax-deferred retirement accounts starting at age 73 (or 75 for those born 1960+); penalty for failure is 25% (10% if corrected).
- Hardship withdrawal
- Distribution from 401(k) due to immediate and heavy financial need; must satisfy IRS safe harbor criteria; subject to income tax and possibly 10% early withdrawal penalty.
- Summary plan description
- ERISA-required document summarizing plan terms, benefits, and participant rights; must be provided within 120 days of plan adoption and updated periodically.
- Contribution limits
- Annual IRS caps on retirement plan contributions: 402(g) elective deferral, 415(c) annual additions, and compensation limit; indexed for inflation.
- Defined benefit funding
- Actuarial process determining employer contributions needed to meet promised benefits; uses cost methods and amortization of unfunded liabilities under IRC §430.
- PBGC
- Pension Benefit Guaranty Corporation; federal agency that insures defined benefit pension plans and pays benefits (up to limits) if plans terminate underfunded.
- Funding target attainment percentage
- Ratio of plan assets to funding target; below 80% triggers benefit restrictions; below 60% prohibits lump-sum distributions.
- Qualified default investment alternative
- Investment default (e.g., target-date fund) that provides fiduciary relief under ERISA §404(c)(5) when participants do not make an election.
- ERISA §404(c)
- Provides fiduciary relief from investment losses when participants exercise control over their accounts and receive adequate investment disclosures.
- Timely deposit rule
- Employer must deposit participant contributions to the plan as soon as reasonably possible; small plans: 7 business days; large plans: 3 business days for withheld amounts.
- Plan asset trust
- Funding vehicle holding retirement plan assets for the exclusive benefit of participants; required for most qualified plans under ERISA.
- Investment policy statement
- Document outlining plan investment objectives, risk tolerance, asset allocation, and monitoring procedures; helps fiduciaries comply with ERISA prudence standards.
- IRC §409A
- Governs nonqualified deferred compensation; requires written plan, election timing, and permissible distribution events; violations trigger immediate taxation plus 20% penalty.
- Incentive stock options
- Equity awards with favorable tax treatment if holding periods met; limited to $100,000 vesting per year; no ordinary income at exercise for regular tax.
- Nonqualified stock options
- Stock options taxed as ordinary income on the bargain element at exercise; no $100,000 limit; common in broad-based employee plans.
- Golden parachute
- Change-in-control payments exceeding three times base amount; excess is nondeductible to employer and subject to 20% excise tax on recipient under IRC §280G.
- Cafeteria plan
- IRC §125 plan allowing employees to choose between cash and qualified benefits on a pre-tax basis; includes FSAs and premium conversion.
- §162(m) deduction limit
- Caps employer tax deduction for compensation to covered employees at $1 million; performance-based exception repealed by Tax Cuts and Jobs Act.
- De minimis fringe
- Small, infrequent benefit (e.g., occasional meals, small gifts) excluded from employee income; not subject to income or payroll taxes.
- Group-term life insurance
- Employer-provided life insurance; cost of coverage up to $50,000 is tax-free; excess coverage imputed income based on IRS Table I rates.