Insurance CH.10

All qualified employer plans must comply with ERISA minimum participation standards designed to determine employee eligibility. In general, employees who have reached age _____ and have completed _______ year(s) of service must be allowed to enroll in a qualified plan.

21, 1

Contribution Plans: Another form of qualified employer retirement plan is known as the __________ plan, whereby employees can elect to take a reduction in their current salaries by deferring amounts into a retirement plan. These plans are called cash or a salary deferral option because employees cannot be forced to participate.

401k

A tax sheltered annuity is a special tax-favored retirement plan available only to certain groups of employees. Tax-sheltered annuities may be established for the employees of specified nonprofit charitable, educational, religious, and other 501(c) (3) organizations, including teachers in public school systems. Such plans generally are not available to other kinds of employees.

403b

Form ____________ is a disclosure document that employee benefit plans use to satisfy annual reporting requirements under ERISA.

5500

___________ imposes a number of requirements that retirement plans must follow to obtain IRS approval as a qualified plan, eligible for favorable tax treatment. This law sets forth standards for participation, coverage, vesting, funding, and contributions.

ERISA

is to protect the rights of workers covered under an employer-sponsored plan

ERISA

The provisions of a defined ________________ plan address the amounts going into the plan currently and identify the participant's vested (nonforfeitable) account. These predetermined amounts contributed to the participant's account accumulate to a future point (i.e., retirement)

contribution

the two major categories of qualified employer retirement plans used primarily by corporate employers. The first is called a defined ______________ plan, which obligates the plan sponsor to make periodic contributions for each participant per a defined formula. The other category is called a defined ___________________ plan, which defines the amount of retirement income each participant will receive.

contribution, benefit

Many of the basic concepts associated with qualified employer plans can be traced to the ___________ ___________ ___________ ___________ ________ of 1974, commonly called ERISA.

employee retirement income security act

Contribution Plans: are employee-owner programs that provide a company's workforce with an ownership interest in the company. Shares are allocated to employees and may be held in an ESOP trust until the employee retires or leaves the company.

employee stock ownership plans

The ____________ __________ rule states that assets held in a company's qualified retirement plan must be maintained for the exclusive benefit of the employees and their beneficiaries

exclusive benefit

For a plan to be qualified, it must be ____________

funded

Employer contributions to a qualified retirement plan are considered a deductible business expense, which lowers the business's ___________ ___________

income taxes

Under the IRS "_____________ ______________" rules, a qualified retirement plan must benefit a broad cross-section of employees.

minimum coverage

Contribution Plans: provide for fixed contributions with future benefits to be determined. This most truly represent a defined contribution plan.

money purchase

Contribution Plans: are established and maintained by an employer and allow employees to participate in the profits of the company. They set aside a portion of the firm's net income for distributions to employee's who qualify under the plan.

profit sharing

There are three primary types of defined contribution plans: ____________ sharing plans, ___________ bonus plans, and ___________ purchase plans.

profit, stock, money

______________ plans are those that meet federal requirements and receive favorable tax treatment.

qualified

Broadly speaking, retirement plans can be divided into two categories: ______________ plans and _____________ plans.

qualified, non qualified

Contribution Plans: is similar to a profit sharing plan, except that contributions by the employer do not depend on profits. Benefits are distributed in the form of company stock.

stock bonus

The earnings of a qualified plan are exempt from income ___________

taxation

A plan is considered to be "_________ ________" if more than 60% of plan assets are attributable to key employees as of the last day of the prior plan year

top heavy

means the right that employees have to their retirement funds

vesting

All qualified plans must meet standards that set forth the employee ___________ __________ and nonforfeitable rights at any specified time.

vesting schedule