NIPA APA flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Accrued benefit
- The benefit a participant has earned to date under the plan formula, payable at normal retirement age; used for vesting, benefit statements, and funding calculations.
- Break in service
- A 12-month period in which a participant completes 500 or fewer hours of service; it can affect vesting and eligibility and must be tracked under plan rules.
- Cliff vesting
- A vesting schedule in which a participant becomes 100% vested only after completing a specified period of service, typically no more than 3 years for single-employer plans.
- Summary annual report
- A disclosure furnished to participants summarizing the plan's Form 5500 financial information, generally due within 9 months after the plan year end.
- Summary plan description
- A plain-language document describing plan terms, rights, and procedures; it must be furnished within 120 days of adoption and updated periodically.
- Hours of service
- A measure of employee work time; 1,000 hours in a 12-month period typically constitutes a year of service for eligibility and vesting purposes.
- Age and service conditions
- The maximum permissible eligibility conditions for a qualified plan are age 21 and 1 year of service, subject to the 2-year/100% vesting exception.
- Top-heavy plan
- A plan in which more than 60% of account balances or accrued benefits belong to key employees; it triggers minimum contribution or benefit requirements.
- Key employee
- An officer above the indexed compensation threshold, a 5% owner, or a 1% owner with compensation above $150,000 indexed; status affects top-heavy testing.
- ADP test
- A nondiscrimination test limiting highly compensated employees' average deferral percentage to 125% of non-HCE ADP or the lesser of 200% or plus 2 points.
- ACP test
- A nondiscrimination test applying the same 125%/200%+2 framework as the ADP test to matching and after-tax contributions made on behalf of employees.
- Section 415 limit
- The annual limit on contributions or benefits under a qualified plan; the 2024 defined contribution limit is $69,000 and the defined benefit limit is $275,000.
- 402(g) elective deferral limit
- The annual cap on elective deferrals to 401(k) and similar plans, set at $23,000 for 2024, with an additional $7,500 catch-up for those age 50 or older.
- Highly compensated employee
- A 5% owner at any time during the year or prior year, or an employee with compensation above the indexed threshold who is in the top-paid group.
- Coverage ratio percentage test
- A test requiring the plan to cover at least 70% of non-highly compensated employees who are eligible; failing it requires the average benefit test.
- Minimum funding requirement
- The minimum contribution an employer must make to a defined benefit plan under IRC 430, with quarterly contributions required when a funding shortfall exists.
- ERISA fiduciary duties
- The duties of loyalty, prudence, diversification, and adherence to plan documents that govern fiduciaries of employee benefit plans under ERISA.
- Prohibited transaction
- A transaction between a plan and a party in interest, such as a sale or extension of credit, that is barred unless a statutory or administrative exemption applies.
- 404(c) relief
- Protection from fiduciary liability for participant-directed investment losses when the plan meets disclosure, control, and diversification requirements under ERISA.
- Form 5500
- The annual return/report filed for employee benefit plans, due by the last day of the 7th month after the plan year end, with a possible 2.5-month extension.
- ERISA fidelity bond
- A bond required for plan officials handling plan funds, set at 10% of funds handled with a $1,000 minimum and $500,000 maximum.
- ERISA preemption
- The doctrine that federal ERISA law supersedes state laws relating to employee benefit plans, except for insurance, banking, securities, and general criminal laws.
- SECURE Act RMD age
- The SECURE Act raised the required beginning age for RMDs to 72; SECURE 2.0 further raised it to 73 and later 75 for certain birth years.
- Required beginning date
- The date by which RMDs must start, generally April 1 of the year after the participant reaches the applicable age, with later distributions due by December 31.
- Uniform Lifetime Table
- The IRS table used to calculate RMDs by dividing the prior year-end account balance by the applicable distribution period based on the participant's age.
- RMD excise tax
- A 50% excise tax on the amount of a required minimum distribution not taken by the deadline, which may be reduced or waived for reasonable error.
- Direct rollover
- A distribution paid directly from one eligible retirement plan to another, avoiding the 20% mandatory federal withholding that applies to payments made to the participant.
- Early distribution 10% tax
- An additional 10% tax on distributions before age 59½, subject to exceptions such as separation from service at age 55, disability, or a qualified domestic relations order.
- Plan loan limit
- The maximum plan loan is the lesser of $50,000 or 50% of the vested balance, reduced by the highest outstanding loan balance in the prior 12 months.
- Form 1099-R
- The IRS form reporting pension, annuity, and retirement plan distributions, furnished to recipients and filed with the IRS by January 31 of the following year.
- Hardship distribution
- A distribution made for an immediate and heavy financial need, limited to the amount necessary to satisfy that need, often using IRS safe harbor events.
- Form 5558 extension
- A request for an extension of time to file Form 5500, granting an additional 2.5 months beyond the normal filing deadline.