QKA cheat sheet

ERISA Title I governs fiduciary conduct, reporting, disclosure, and civil enforcement; IRC qualification rules appear mainly in IRC §§401 through 416.

ERISA §3(34) defines an employee pension benefit plan; IRC §401(a) lists the requirements for a qualified trust.

ERISA §404(a)(1) fiduciary duties include exclusive purpose, prudence, diversification, and adherence to plan documents.

ERISA §402(a) requires a written plan document; §402(b) requires a named fiduciary and claim procedures.

ERISA §406 and IRC §4975 prohibit transactions between a plan and a disqualified person unless an exemption applies.

ERISA §206(d)(3) and IRC §414(p) define QDROs; QDRO payments are permitted despite the anti-alienation rule.

ERISA §413 limitations period is generally 6 years for a fiduciary breach, or 3 years after actual knowledge.

IRC §4971 imposes excise tax for minimum funding failures in defined benefit plans; IRC §4975 imposes excise tax on prohibited transactions.

IRC §410(a)(1) generally limits eligibility to age 21 and 1 year of service; 401(k) deferrals cannot use the 2-year eligibility rule.

A year of service for eligibility is generally 1,000 hours in a 12-month period, or the elapsed-time equivalent.

IRC §410(b) coverage requires either the ratio percentage test or the average benefit test.

Ratio percentage formula: (NHCE benefiting ÷ all NHCEs) ÷ (HCE benefiting ÷ all HCEs) must be at least 70%.

The average benefit test requires a nondiscriminatory classification plus an average benefit percentage of at least 70%.

Safe harbor 401(k) designs require a 3% nonelective contribution or a basic matching contribution, 100% immediate vesting, and an annual notice.

Long-term part-time employees must be allowed 401(k) deferrals after 500 hours in 2 consecutive years for plan years beginning after 2024; prior law used 3 years.

New 401(k) plans generally must include automatic enrollment at 3% to 10%, escalating to 10% to 15%, subject to statutory exceptions.

IRC §402(g) limits elective deferrals; the limit is indexed and was $23,500 for 2025, excluding age-50 catch-up contributions.

IRC §414(v) catch-up limits were $7,500 for age 50 or older in 2025 and $11,250 for ages 60 through 63 under the SECURE 2.0 super catch-up.

IRC §415(c) annual additions equal the lesser of 100% of compensation or $70,000 for 2025; annual additions include deferrals, employer contributions, forfeitures, and after-tax contributions.

IRC §401(a)(17) compensation cap was $350,000 for 2025 and applies to contributions, allocations, and nondiscrimination testing.

ADP test: HCE ADP generally cannot exceed 125% of NHCE ADP; an alternative limit of NHCE ADP plus 2 percentage points applies when NHCE ADP is 8% or less.

ACP test applies the same 125% or plus-2-percentage-point structure to after-tax employee contributions and matching contributions.

IRC §401(a)(4) requires contributions or benefits to be nondiscriminatory in favor of HCEs; plans may use safe harbors or the general test.

HCE status: a more-than-5% owner, or a non-owner with compensation above the indexed threshold and in the top-paid 20% group; the 2025 compensation threshold was $160,000.

Excess §415(c) annual additions are corrected by refunding employee contributions and/or reducing employer contributions, with attributable earnings.

Required minimum distributions begin at age 73, or age 75 for individuals born in 1960 or later; the first RMD is due by April 1 of the following year, with an active-employee exception.

RMD amount equals the prior December 31 account balance divided by the Uniform Lifetime Table factor for the participant's age.

IRC §72(t) imposes a 10% additional tax on taxable distributions before age 59½, subject to exceptions such as disability, death, separation at age 55, QDRO, and medical expenses over 7.5% of AGI.

Eligible rollover distributions are subject to mandatory 20% withholding unless paid in a direct rollover.

The 60-day rollover rule allows indirect rollovers; IRA-to-IRA rollovers are limited to one per 12 months.

Plan loans are limited to the lesser of $50,000 or 50% of the vested account balance, with a $10,000 minimum; repayment must be level amortization at least quarterly within 5 years, except for a principal residence loan.

Hardship safe-harbor needs include medical expenses, tuition, purchase or repair of a principal residence, eviction or foreclosure, burial expenses, and casualty loss.

QDROs, QJSA notices, and spousal consent rules govern many distributions; 401(k) plans are generally subject to QJSA rules unless an exception applies.

Form 5500 is generally due by the last day of the seventh month after the plan year ends; Form 5558 extends the due date by 2½ months.

Form 5500-SF is available to certain small plans with fewer than 100 participants; Form 5500-EZ is for one-participant plans meeting conditions.

The Summary Annual Report is generally due within 9 months after the plan year ends, or 2 months after an extended Form 5500 due date.

ERISA §404 fiduciary duties include loyalty, prudence, diversification, compliance with plan documents, and reasonable plan expenses.

ERISA §412 fidelity bond coverage is generally 10% of plan assets, with a $1,000 minimum and a $500,000 maximum; the maximum is $1,000,000 if the plan holds employer securities.

ERISA §408(b)(2) requires service provider fee disclosures; ERISA §404a-5 requires participant fee disclosures.

Participant deferrals must be deposited as soon as reasonably possible; DOL safe harbors are 7 business days for small plans and 3 business days for large plans.

Form 8955-SSA reports deferred vested participants to the Social Security Administration and is generally filed with Form 5500.

A plan is top-heavy when more than 60% of total account balances or accrued benefits belong to key employees at the determination date.

Key employees include more-than-5% owners, more-than-1% owners with compensation above $150,000, and officers with compensation above the indexed threshold, limited to 50 officers.

Top-heavy defined contribution minimum: 3% of compensation for non-key employees; top-heavy defined benefit minimum: 2% per year of service up to 20%.

Top-heavy vesting schedules are 3-year cliff vesting or 2-6 year graded vesting at 20% per year.

IRC §411(a)(2) permits 3-year cliff or 2-6 year graded vesting for employer contributions; safe harbor contributions must be 100% immediately vested.

HCE status is based on more-than-5% ownership or compensation above the indexed threshold and inclusion in the top-paid 20% group for non-owners.

IRC §401(a)(4) nondiscrimination applies to contributions, benefits, and the availability of rights and features, not only to allocation rates.

A partial termination can cause 100% vesting for affected participants when employer-initiated severance is significant.

EPCRS is the IRS correction system under Rev. Proc. 2021-30 and updates; its components are SCP, VCP, and Audit CAP.

SCP allows self-correction of insignificant failures at any time and significant failures generally within 3 years if the failure is not egregious or recurring.

VCP requires an IRS submission and fee for failures that cannot be self-corrected under SCP.

Audit CAP applies when failures are identified during an IRS examination and involves correction plus negotiated sanctions.

The correction principle is to restore affected participants to the position they would have occupied had the failure not occurred, including earnings or lost earnings.

Missed deferral correction generally includes a QNEC of 25% of the missed deferral for NHCEs or 50% for HCEs, plus corrective matching contributions and earnings.

ADP or ACP excess contributions must be distributed with earnings within 2½ months after the plan year ends to avoid the 10% excise tax.

Late deposit of participant deferrals requires restoration of lost earnings; late Form 5500 filing can trigger indexed DOL and IRS penalties.