Download QKA EXAM 1 2025/2026 QUESTIONS WITH CORRECT ANSWERS100% ACCURATELY RATED REAL EXAM A+ GRAD and more Exams Nursing in PDF only on Docsity!
QKA EXAM 1 2025/2026 QUESTIONS WITH
CORRECT ANSWERS100% ACCURATELY RATED
REAL EXAM A+ GRADED – BARTON COMMUNITY
COLLEGE
Financial Hardship Distributions · Medical care · Principal residence purchase or damage repair · Tuition payments · Eviction prevention · Burial/funeral expenses · Federal disaster · Adoption/birth - $5000 per child - no 10% tax - 1 year period to apply for it Financial Hardship Requirements Requirements include: · Can't exceed hardship · Available other distributions have been taken · Other means can not satisfy the financial need
Financial Hardship Sources Money for certain situations: · Elective deferrals · Matching contributions · Nonelective contributions · QNECs and QMACs · Safe harbor contributions · After-tax contributions Pre-Tax Hardship Withdrawal Withdrawal that is: · Taxed as ordinary income · Plan doc defines which sources · Subject to state and local income taxes Required Minimum Distribution (RMD) minimum amount that must be withdrawn from a retirement plan each year must be taken no later than the April 1st of the year after age 72 taxation notice notifies participants
· Event rule - death, disability or age 59. Deemed distribution The portion of a loan that becomes taxable because it fails to satisfy the loan requirements, but cannot be offset by the participant's available balance because there is not a distributable event. The deemed distribution accrues interest and must be repaid in order to close the loan profit-sharing plan an organization-wide plan that distributes compensation based on some established formula designed around a company's profitability Profit Sharing Plan Features
- plan with optional employer contributions
- 401(k) feature
- Discretionary employer contribution formula
- flexible distribution rules
- shares profit with all employees Stock Bonus Plan a type of profit-sharing plan in which the employer rewards employees with company stock instead of cash
Employee Stock Ownership Plan (ESOP) a company-established benefits plan in which employees acquire stock, often at below-market prices, as part of their benefits. can be combined with other DC plan or money purchase plan, or just stock bonus 403(b) plan a tax-deferred retirement plan for employees of tax-exempt organizations 403(b) Plan + ERISA Plan that can be exempt from ERISA if they have no employer contributions and the employer has limited involvement, and is not subject to ADP/coverage testing defined benefit plan pension plan that guarantees a specified level of retirement income Simple employer plan (SEP)
- Plan for small businesses
- only has employer contributions
- all eligible employees must participate
SIMPLE 401(k)
- a cross between a simple ira and traditional 401(k) plan and offers some features of both plans.
- employee is vested immediately.
- for small businesses Retirement Plan Government Requirements Satisfying ERISA + IRC Sec 401(a) ERISA
- Body of law that governs retirement plans
- Governs through DOL or Dept. of Treasury (IRS) DOL Oversight Dept. that oversees:
- participant rights
- fiduciary behavior DOT + IRS Oversight
Dept. that oversees:
- tax issues
- tax benefit qualification (for qualified plans) ERISA Title I Includes:
- Labor Law Provisions
- DOL Enforced
- Advise employees regarding benefits they offer
- Deliver promised benefits
- Provide claims and appeal procedures
- Manage benefits wisely and for the benefit of its employees, a fiduciary duty
- Not interfere with or retaliate against beneficiaries ERISA Title II Includes:
- Tax laws
- DOT Enforcement ERISA Title III Divides responsibility between the DOL and Treasury Department.
Plan Document A legal document detailing the specific plan provisions selected by the plan sponsor to meet retirement plan and business goals (adoption agreement + basic plan doc) Summary Plan Description (SPD) required document stating beneficiaries' benefits and legal rights Summary Plan Description Elements o Eligibility o Entry date o Matching contribution amounts o Primary disclosure doc required by ERISA Title I (Material provisions, Benefits claims, ERISA rights) defined contribution plan retirement plan in which the employer sets up an individual account for each employee and specifies the size of the investment into that account 401(k) plan a tax-deferred retirement plan offered to employees by their employer
401(k) Plan Features
- can be Profit Sharing or Stock Bonus
- always has elective deferrals
- all employers except government
- combo of employee + employer (matching and nonelective) contributions Money Purchase Plan Defined contribution plan with mandatory employer contributions and no employee contributions Money Purchase Plan Features
- plan that uses a fixed percentage of employee earnings to defer compensation
- good for organizations with relatively stable earnings percentage is fixed
- contributions must be made every year
- contribution limits are same as profit-sharing plans pension plan a retirement plan that is funded at least in part by an employer
401(k) and 403(b) Advantages · Easy way to save money for retirement · Employer and employee tax advantages · Employer contribution match programs Elective Deferral Types Pre-tax, Designated Roth, Catch-Up Contributions Plan Eligibility Requirements of age and service to enter a plan Deferral-Eligible Compensation base salary, overtime, commissions, bonuses Grace Period after Separation later of 2.5 months after severance or end of limitation year Annual Deferral Limit (IRC 402(g)) Limit = $
Takes into account pre-tax and Roth contributions IRC 415(c) Limit can't exceed lesser of 100% of participant's compensation OR DC yearly limit $10,500 for single taxpayers and married couples filing jointly, and to $5,250 for individuals ADP Test Limit compares deferral % of HCEs to NHCEs - HCEs should not benefit greater than NHCEs (relative to compensation) Excess Deferrals
- deferrals above IRC 402(g) Limit
- can be taxed double
- recorded on w- 2 After-tax contributions these contributions are taken from your net income after taxes. No taxes are due upon withdrawal.
60 - day Rollover If a distribution from an IRA or retirement plan is paid directly to you, you can deposit all or a portion of it in an IRA or retirement plan within 60 days. Taxes will be withheld (20%) requiring other funds to roll over the full amount of the distribution. Distribution Options · Do nothing (until age 72) · Lump sum · Annuity (rest of lifetime then to beneficiary) - not common
- Money purchase + DB plans must offer
- Requires Qualified Joint and Survivor Annuity · Installments (specific time period/ending date)
- May end prior to selected payment if account has negative investment returns · Partial lump sum · Direct or 60-day Rollover Plans that permit loans · Qualified Plans · 403(a) and 403(b)
· Governmental Plans Loan Offering Advantages Advantages · Tax-free fund access for participants · No lengthy application/process · Convenient repayment · Interest is paid to participant's account balance, not an external party Loan Offering Disadvantages Disadvantages · Negative tax consequences for defaulting · Leakage of retirement assets · Admin complexity How to add loans to a plan
- Amend plan doc to include loans
- Establish procedures for administration
- Notify participants
1099R
IRS form used for reporting on distributions from pensions, annuities, retirement or profit sharing plans, IRAs, charitable gift annuities and Insurance Contracts. How to determine eligibility
- Identify requirements (age, service, etc.)
- Accumulate data (requirements, entry date, etc.)
- Determine age (can't be older than 21)
- Determine service (can't be more than 1 year)
- Determine eligible categories, e.g. if they are excluded because of contractor status
- Determine entry date Service method Counting hours, can't be more than 1000 Elapsed Time Method Use years or months of service Eligibility Special Circumstances
- Dual eligibility
- Counting service for new plans
- Eligibility changes
- Break-in-service
- Rehires (eligible on date of rehire if NO break-in-service reqs)
- FMLA
- Part-times with >500 hours of service in 3 consecutive years Vesting an employee's right to at least a portion of the benefits accrued under an employer pension plan, even if the employee leaves the company before retiring Fully Vested Amounts · pre and after-tax elective deferrals, catch-up contributions and rollovers Partially/Non auto vested amounts employer matches and nonelective sources Rule of Parity
