1
Q
An multiple employer plan APPLIES COVERAGE TESTING UNDER 410 B SEPARATELY FOR EACH UNRELATED EMPLOYER:
A
True
2
Q
A multi employer plan is maintained under a collectively bargain agreement between an employee organization, and more than one unrelated employer, true or false?
A
True
3
Q
A multiple employer plan is one adopted by two or more employers where at leased two of the participating employers are not members of the same related group. True or false?
A
True
4
Q
A multiple employer plan sponsored by the leasing organization may allow all the leasing organizations recipient organizations to participate, true or false?
A
True
5
Q
Substantially full-time service means 15:00 and a 12 month period or 75% of the customary hours in that job position if less. True or false?
A
True
6
Q
Whether the recipient has the right to hire or fire, an individual is a relevant factor in the primary direction or control test and determining whether the employee is a leased employee
A
False
7
Q
Benefits, contributions, and compensation from all employers participating in a multiple employer Plan, sponsored by a leasing organization would be aggregated for each part Participant account from both the leasing organization and the recipient organization for computing and the 415 limit
A
True
8
Q
Years of service with both the leasing organization and the recipient organization are aggregated if they both are participating employers in the same multiple employer plan
A
True
9
Q
The leased employee is included in the recipient and the leasing organization, single employer plans for HCE determination
A
True
10
Q
A multiple employer plan, sponsored by the leasing organization must perform coverage testing separately for the leasing organization and the recipient organization
A
True
11
Q
All corporations are taxed on their earnings at the corporate level and not at their shareholder level.
A
False
And S corporation is taxed at the individual shareholder level, not the corporate level
12
Q
A sole proprietor files, a separate tax return to report earned income
A
False
The earned income for a sole proprietor is reported on the individuals tax return not a separate return
13
Q
A QSLOB who meets the different industries safe, Harbour will have met the administrative scrutiny test
A
True
14
Q
A sole proprietor is earnings are reduced by 100% of the self-employment tax when determining earned income
A
False
The earnings are reduced by 1/2 of the self-employment tax
15
Q
An LLP may be a nonprofit organization
A
False
16
Q
The separate line of business must satisfy a 50 employee requirement, a notice require requirement and an administrative scrutiny requirement to be a QSLOB
A
True
17
Q
HQSLOB must be tested separately for all annual compliance testing
A
False
The employer may elect the test on a QSLOB basis for coverage. Top heavy as well as the application of 415 among other things are performed on an employer wide basis.
18
Q
A plan must satisfy the non-discriminatory classification test on an employer wide basis first before testing on a QSLOB basis
A
True
19
Q
Compensation that may be used for plan purposes for employees of a C corporation is formed W-2 compensation
A
True
20
Q
Compensation that may be used for plan purposes for a partnership is formed W-2 compensation
A
False
Earned income
21
Q
A parent subsidiary controlled group exists if the companies are connected through at least 50% stock ownership
A
False
The companies must be connected by at least 80% of stock ownership
22
Q
A brother-sister controlled Group exists if either the common ownership or the effective control test is satisfied
A
False
Both must be satisfied
23
Q
Attribution between spouses does not apply if the couple is childless
A
False
24
Q
Attribution under code 318 from a parent to a minor child app applies only if the parent owns more than 50% of the business
A
False
Attribution applies to minor children, regardless of the amount owned by the parent
25
Company a and company B are controlled group. The workforces of both companies are considered when testing each companies plan for coverage requirements.
True
26
A financial institution is considered a service organization because it provides the service of lending money
False
27
In order for an A-organization group to exist, the a organization must have at least a 10% owner ownership interest in the FSO.
False.
Ownership is required, but There’s no minimum ownership percentage for an A-Org.
28
If an FSO is a corporation. It always must be a professional service corporation for affiliated service group rules.
False
If an FSO is a corporation in need only be a professional service corporation if it is part of an A-org group. The requirement does not apply to B-Org groups.
29
If two or more entities are deemed to be an affiliated service group, they do not need to be tested together for top heavy purposes as long as each other is not top heavy on their own.
False
Plans must be aggregated for top heavy purposes
30
If two or more entities are deemed to be an affiliated service group and each entity sponsors, its own plan, each plan must pass coverage.
True
31
For purposes of determining any type of affiliated service group, ownership is attributed from a grandchild to a grandparent, but not from a grandparent to a grandchild
True
32
415 compensation must include elective to deferrals to a 401(k) plan
True
33
The average percentage of total compensation that is considered for non-HCE’s must be at least 70% of the average percentage of total compensation considered for HCEs in order for the definition of compensation to satisfy 414S.
False.
If the definition of compensation does not satisfy one of the 414 S Safeharbor, the average percentage of total compensation that is considered for HC’s cannot exceed the average percentage of total comp for NHCE is by more than a de minimus amount of 3%
34
The plans definition of compensation used for allocating contributions must satisfy the non-discriminatory definition of compensation under 414 S
False
414 S compensation must be used to determine if the contributions are non-discriminatory. However, a plan is not required to use a definition of compensation that satisfies 414 us and calculating the amount of contributions provided in the plan.
35
414 S compensation must include elective deferrals to a 401(k) plan to avoid testing that definition for non-discrimination.
False
Elective referrals may be excluded from the definition of 414 S as a safe harbor, so long as all elective deferrals (401(k), 403B, Roth, and 125 plan) are treated the same
36
415 compensation must be used to determine HCES
True
37
414 S compensation must be used to determine key employees
False
415 comp is used
38
415 comp must not include tips, depending on how 415 compensation is defined
False
415 may include some tips
39
Designated Roth contributions are included in 415 compensation
True
Care must be taken that designated Roth contributions are not counted twice due to these contributions are reported on form W-2
40
Excluding nontaxable fringe benefits from 415 compensation is a safe harbor modification to 414 S, meaning that the resulting definition will not need to be tested for non-discrimination purposes
False
None of the definitions include non-taxable fringes. They only include taxable fringe benefits.
41
415 compensation is based on the plan year
False
It’s based on the limitation year
42
To be excludable under the annual coverage testing method, an employee must be excludable for the entire Plan year
True
43
A plan passes the non-discriminatory classification test if it passes either the reasonable classification or the non-discriminatory classification ratio test
False
To pass the non-discriminatory classification test a plan must pass both
44
A plan with an non-HCE employee concentration percentage of 70% will have a higher Safeharbor percentage than a plan with a nonHCE concentration percentage of 80%
True
45
A plan with a coverage ratio percentage that is less than the safe harbor percentage fails the non-discriminatory classification ratio test
False.
This plan could still pass the test if the coverage ratio percentage satisfies the unsafe harbor percentage, and passes the facts and circumstances test
46
When calculating the ABP both employer, contributions and elective referrals are included
True
47
Permissive aggregation might be used when one plan fails on its own, but could pass when aggregated with another plan
True
48
If an employee is part of two or more disaggregated groups during a plan year, each group must take into account all allocations made to the employees account during the Plan year
False
Each disaggregated group generally takes into account, only benefits, accrued, or allocations made while the employee is a member of that group
49
A plan must satisfy either the non-discriminatory classification test or the average benefit percentage test to satisfy the average benefit test.
False.
A plan must satisfy both of these tasks in order to pass the average benefit test
50
If NHCEs are excluded from the plan, the plan is deemed dissatisfy coverage requirements
False.
If there are NHCEs in the coverage testing group, the plan is deemed to satisfy coverage requirement. This is different from excluding NHCEs from participating in the plan altogether
51
Leased employees are part of the recipient employers workforce for coverage testing purposes
True
52
If contributions, benefits, or availability of BRFs are discriminatory, a corrective amendment may be adopted within 9 1/2 months after the clothes of the Plan year.
True
53
A uniform points plan is the only type of non-design based safe Harbour defined contribution plan
True
54
A rate group consists of a single, HCE and each NHCE who has an equal or greater allocation rate or accrual rate
False.
A rate group is established for each HCE. However, there may be more than one in a rate group.
55
If plans are aggregated to satisfy the coverage tests under 410 B they must be aggregated to satisfy the non-discrimination test under 401A4
True
56
If two or more plans are permissively aggregated for non-discrimination testing then the non-discriminatory classification tests must be applied as if the plans were a single plan
True
57
For purposes of satisfying, the gateway, contribution test, each NHCE who benefits under the plan must receive an allocation of at least least 5%
False
The lowest allocation rate for any NHCE who benefits under the plan must be at least equal to the lesser of 1/3 of the highest allocation rate for any HCE or 5% of 415 compensation.
58
Age based plans automatically satisfying, non-discrimination testing since every participant has the same EBAR
False
Age based plans are designed to satisfy non-discrimination purposes under this premise, but the plans did not automatically pass. For example, Participant EBARS could vary due to 415 limitations or top heavy minimum contributions.
59
Cross tested defined contribution plans may not use the safe Harbor approach to satisfy non-discrimination under 401A4
True
60
A plan must benefit at least one NHCE to satisfy non-discrimination requirements
False
An employer with only HCE or wear NHCE are excludable for coverage, may still satisfy non-discrimination
61
Rate groups must satisfy the average benefit test
False
Rate groups can satisfy either the ratio percentage test, or the average benefit test
62
To satisfy the diversification require requirements, a plan must offer three investment alternatives other than stock
False.
A plan need not offer other investment alternatives. It could offer a cash distribution or a transferred to another qualified plan that offered such investment alternatives.
63
Leveraged ESOP’s must take a loan from a commercial source
False.
The loan can come from any source so long as it is an arms length transaction
64
ESOP’s cannot be integrated using permitted disparity
True
65
For publicly traded stock, voting rights must be passed through to the Participant in the ESOP
True
66
For closely held stock, voting rights must be passed through to the Participant in the ESOP
False
67
Stock bonus plans may make distributions in employer stock
True
68
Many employers can contribute more to an ESOP than to other defined contribution plans
True
69
A Participant who is age 55 is eligible for an IRC 401828 diversification
False.
Our Participant must be age 55 with 10 years of Plan participation to be eligible for diversification
70
Dividends paid to an ESOP may be tax deductible to the employer
True
71
If anESOP makes a prohibited allocation or a cruel, an excise tax equal to 50% of the accrual is imposed on the S corporation, and the disqualified person is deemed to have received a distribution in the amount of the prohibited allocation
True
72
The definition of Family used in IRC 409P is much broader than other definitions of Family used under other attribution rules that apply to qualified plan requirements
True
73
A person who actually exercises control of the plans management, but is not authorized to do so is a fiduciary
True
74
An employer that sponsors a qualified Retirement Plan as a fiduciary as a result of its role as settler of the trust
False.
An employer does not become a fiduciary by nature of its role as settler of the trust since settler functions are nonfiduciary.
However, in an employer typically becomes a fiduciary when it takes on the role of planet, administrator, or other roles.
75
When plant assets are invested in contracts issued by an insurance company, the insurance company becomes a fiduciary since it manages the assets that provide the benefit benefits under the plans
False
Plan assets are deemed not to include the underlying assets of an insurance company with respect to a contract is issued by an insurer to an employee benefit plan
76
If a plan does not specify a named fiduciary, it must provide a procedure for identifying a named fiduciary
True
77
An investment manager includes any person who acts in a fiduciary capacity with respect to plan assets
False
Investment manager is an ERISA term that refers to a fiduciary who has the power to manage, acquire, or dispose of any plant assets, and who has acknowledged fiduciary status in writing. ERISA permits, only certain types of entities to act as investment managers, and only a name fiduciary may appoint an investment manager.
78
A person may serve in more than one fiduciary capacity in a plan
True
79
A plan must identify the persons with authority to amend the plan
False.
The plan must provide a procedure for identifying the persons with authority to amend the plan. A reference to. “ the company” satisfies the request to identify the persons with authority to amend
80
An investment policy statement must be adopted to provide instructions to the fiduciaries regarding the investment of Plan assets
False.
A plan must provide a procedure for establishing and implementing a funding policy.
However, it did not adopt an investment policy statement, although it may be advisable to do so.
An investment policy statement provides general instructions or guidelines, applicable to investment situation
81
If a trustee discovers a breach of fiduciary liability by a co-fiduciary, the best course of action is to resign as trustee
False
Resignation of a trustee may not be sufficient to avoid liability when the trustee has knowledge of a breach.
82
A plan, a fiduciary, or an employer may purchase insurance to cover liability or losses by reason of a fiduciary breach
True
83
He disqualified person is always a party and interest
True
84
A party and interest is always a disqualified person
False
85
A prohibited transaction does not necessarily mean a plan disqualification
True
86
The PT rules do not apply to plans whose assets are Participant directed
False
87
A plan may not sell or lease property to a disqualified person
True
88
Loans to plan participants are exempt from the PT rules as long as certain conditions are met
True
89
A class exemption provides relief from the excise tax under the IRC and the fiduciary liability consequences under ERISA
True
90
An excise tax of 100% of the amount of the PT may be imposed if the transaction is not corrected in a timely manner
True
91
The plan is liable for payment of the PT excise tax
False.
The disqualified person is liable for the tax
92
The DOL may assess civil penalties on a party and interest involved in a PT
True
93
The distribution notice describes the benefit payment options, right to delay distribution until at least normal retirement age, and Direct rollover future.
True
94
Certain distribution notice requirements depend on whether the QJSA rule applies to the Participant
True
95
The Supreme Court in validation of DOMA allows, same gender couples who are legally married to have the rights of opposite gender couples such as allowing for hardship distributions for spousal medical expenses.
True
96
A plan that requires spousal consent for a loan will need to obtain spousal consent from same gender spouses, as well as opposite gender spouses
True
97
Distribution notice require requirements referred to information that must be provided to the Participant before distributions may be made
True
98
The $7000 threshold for the notice and consent requirements is based on the participants vested account balance as of the date of distribution
True
99
When a participant takes a partial distribution, the consent given applies to the full account balance
False.
The consent given for a partial distribution only applies to the partial distribution
100
The beneficiary of a life insurance policy will be taxed on the total distribution from the policy
The beneficiary is taxed on the net insurance proceeds, which is the face amount of the policy less the reserve accumulation
101
A self-employed individuals contributions for the purchase of life insurance are not deductible by the self-employed individual
True
102
Non-pension plans may use the 100 times rule for determining incidental benefit limits regarding life insurance
False
The 100 times a rule is only applicable to pension plans
103
Advertising include includes all forms of communication, whether oral, written, or electronic
True
104
Professional services include providing advice, recommendations, or opinions related to a Retirement Plan
True
105
NAR a member may disclose to another ARA member confidential information learned about a client whenever asked by another ARA member
False
106
The ARA code of professional conduct shall override the IRS circular 230
Fall
107
NAR a member who has the education, training, and experience to advise a client regarding the benefits of a cash balance plan versus a target benefit plan may do so
True
108
NAR a member who has found guilty of a felony shall be subject to ARA disciplinary procedure
True
109
AnARA member may provide professional services to a client who request it, even though the client is being served by another professional in the same area
True
110
If a request for information is received by an ARA member from a person authorized by ARA to obtain information regarding a possible violation of the code of professional conduct, the member shall respond properly in writing
True
111
A credential is a membership design designation conferred by ARA
True
112
Confidential information may include information with the ARA member has reason to believe that the client would not wish to be divorced
True
QKC
flashcards
Decks in class (15)
# Cards
-
Chapter 1: Plans Covering More Than One ER And Leased EEs203
-
Chapter 2: Other ER Situations131
-
Chapter 162
-
Chapter 3 Controlled Groups & ASGs92
-
IRC codes24
-
Chapter 4: Compensation107
-
Chapter 5: Average Benefits Test and Special Rules129
-
Chapter 6: Non-Discrimination141
-
Chapter 7: ESOPs155
-
Test Questions6
-
Chapter 8: Fiduciary Standards118
-
Chapter 9: Prohibited Transactions134
-
Chapter 10: Distributions & Insurances111
-
Chapter 11: Code of Conduct0
-
Chapter Tests: True/False Questions112
