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20 Cards in this Set
- Front
- Back
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A qualified plan may rely on operational compliance alone? |
No a plan is not qualified unless it satisfies the requirements of the law in both form and operational.
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A plan sponsor is not required to submit the plan to the IRS for a letter of determination. |
TRUE A plan can, but is not required.
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The consistent failure of a plan to make the required minimum distributions (RMDs )under IRC §401(a)(9) could disqualify a plan. |
TRUE the plan is required to disburse RMDs or it’s disqualified. |
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A qualified plan must accept a direct transfer of an eligible rollover distribution. |
No qualified plan is not required to accept an eligible rollover distribution. |
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A sponsoring organization must expect to have at least 30 employers adopting a basic plan document. |
TRUE An organization must expect to have at least 30 employers adopting a basic plan document.
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Form 5307 is used to request a determination letter for an individually designed plan. |
No from 5300 is used for an individually designed plan. |
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An advisory letter is issued to the sponsoring organization of an M&P plan. |
No an advisory letter is issued for a Volume submitter plan. |
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SCP may be used to correct a significant operational failure as long as it is corrected or substantially corrected within the two‐year correction period. |
TRUE significant operational failure can be corrected by using SCP as long as it is corrected right away or within the two year correction period. |
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The plan sponsor may use Audit CAP even if the plan is currently under IRS audit. |
TRUE Audit Cap can be used even if plan is under audit. |
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An SMM must be provided to each participant and each beneficiary who is receiving benefits under the plan no later than 210 days after the close of the plan year in which the amendment was adopted. |
TRUE SMM must provide participants and beneficiaries no later than 210 days after the close of the plan year in which the amendment was adopted. |
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All of the following statements regarding qualified plans are TRUE, EXCEPT: A. They must provide for participant loans. B. They must limit benefits or contributions under IRC §415. C. They must allow for eligible rollover distributions to another eligible retirement plan. D. They must contain provisions protecting benefits in the event of a merger with another plan. E. They must provide for RMDs under IRC §401(a)(9). |
A. Although it is very common to allow for participant loans in a qualified plan, it is not a requirement. |
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Which of the following statements regarding plan qualification under §401(a) is/are TRUE? I. A qualified plan may not permit the assignment of benefits under any circumstances. II. A contribution may be returned to the employer if it was made due to amistake of fact. III. Participant accrued benefits must be protected upon plan merger. A. I only B. II only C. I and III only D. II and III only E. I, II and III |
D A qualified plan may permit the assignment of benefits in limited circumstances. |
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All of the following are advantages of having a qualified plan, EXCEPT: A. Tax‐deductible employer contributions B. Earnings on employer contributions are tax deductible to the employee C. Deferred taxation to the employee on employer contributions D. Most distributions are eligible for rollover
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B Taxation on earnings is deferred. It is not a deduction to be taken by plan participants. |
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All of the following statements regarding plan documents are TRUE, EXCEPT: A. An M&P plan consists of a basic plan document and a trust document. B. An M&P plan must be maintained by a sponsoring organization. C. A volume submitter plan consists of a specimen plan and optional provisions that may be used in that specimen plan. D. A volume submitter plan is pre‐approved by the IRS.. E. An individually designed plan is not pre‐approved by the IRS. |
A. An M&P plan document consists of a basic plan document and an adoption agreement. |
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Which of the following statements regarding plan documents is/are TRUE? I. An opinion letter is issued to a sponsoring organization of an M&P plan. II. An advisory letter is issued to the sponsor of a volume submitter document. III. A determination letter is issued to the plan sponsor of an individually designed plan. A. I only B. II only C. I and III only D. II and III only E. I, II and III |
E All of the statements are true. |
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All of the following statements regarding VCP are TRUE, EXCEPT: A. It may be used to correct significant qualification violations. B. It may be used to correct insignificant qualification violations. C. It may be used to correct egregious failures. D. It may be used even if the plan does not have a determination letter. E. It may be used by plans currently under examination. |
E To use VCP to correct a violation, the plan must not be under examination. |
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All of the following statements regarding SCP are TRUE, EXCEPT: A. It may be used to correct significant qualification violations. B. It may be used to correct insignificant qualification violations. C. It may be used to correct egregious failures. D. It is used to correct operational failures. E. It involves no disclosure or fees to the IRS. |
C SCP may not be used to correct egregious failures. |
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Which of the following is/are potential disqualification issues addressed under EPCRS? I. Plan document failures II. Catastrophic failures III. Demographic failures A. I only B. II only C. I and III only D. II and III only E. I, II and III |
C The potential disqualification issues addressed by EPCRS include plan document failures, operational failures, demographic failures and employer eligibility failures. |
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All of the following statements regarding notices to participants of plan provisions and amendments are TRUE, EXCEPT: A. The SPD must be written in a manner that is reasonably expected to be understood by the average plan participant. B. For an existing plan, a participant must receive the SPD no later than 30 days after he or she first becomes eligible to participate. C. For a new plan, a participant must be receive the SPD no later than 120 days afterthe later of the effective date or the adoption date of the plan. D. A beneficiary is not required to receive an SPD until 90 days after he or shebegins to receive benefits from the plan. E. An SMM is required when there has been a material modification to the plan orwhen the information provided in the SPD has changed. |
B For an existing plan, a participant must receive the SPD no later than 90 days after he or she first becomes a participant. |
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Which of the following statements regarding plan disqualification is/are TRUE? I. The employer loses its deduction for vested contributions made to a plan that is disqualified. II. The NHCEs may be taxed on vested contributions, unless the plan isdisqualified solely due to a coverage violation. III. Taxes may apply if a distribution from a disqualified plan was rolled overand resulted in an excess contribution to an IRA. A. I only B. II only C. I and III only D. II and III only E. I, II and III |
D If the plan is disqualified, the employer loses its deduction for non vested contributions made to the plan for open tax years, |
