CEBS RPA 1 EVALUATION UPDATED QUESTIONS
AND ANSWERS SURE A+
✔✔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. Participants have investment risk.
✔✔qualified retirement plan - ✔✔A retirement savings plan approved by the Internal
Revenue Service that provides individuals with a tax benefit. Plan meets requirements
of ERISA as amended.
✔✔Section 415 compensation - ✔✔Compensation used for the purposes of the plan.
✔✔HCE (highly compensated employee) - ✔✔An employee who owns more than 5
percent of the employer, or (2) received compensation in excess of $120,000.
✔✔NHCE (nonhighly compensated employee) - ✔✔An employee who is not an HCE is
a non-highly compensated employee (NHCE).
✔✔Key requirements of an ERISA qualified plan - ✔✔Plan assets cannot be diverted.
Plan is for exclusive benefit of employees and beneficiaries. Permanency requirement.
✔✔Section 401b tests - ✔✔Non-discrimination testing and coverage tests.
, ✔✔ERISA disclosure reporting - ✔✔S P D, S M M, Form 5500, S A R
✔✔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.
✔✔Section 401 a 17 limit on includable compensation - ✔✔$270,000 in 2017. $275,000
in 2018.
✔✔Section 415 Limits Defined Contribution - ✔✔Individual limit $54,000 or 100% of
pay. Company limit 25% of covered payroll.
✔✔Section 415 Limits Defined Benefit - ✔✔Individual limit $220,000 annual benefit for
2018 or 100% of three year average.
✔✔Joint and Survivor Annuity - ✔✔A benefit form required to be offered to married
individual in a pension plan
✔✔Minimum distribution requirement - ✔✔Lifetime benefits must begin no later than
age 70 and a half unless a person is still working.
✔✔Top Heavy Plans - ✔✔Qualified plan becomes top heavy is greater than 60%
benefits go to key employees
✔✔Key employes - ✔✔A 5% owner and anyone earning over $150,000.
✔✔Basic features of DB plans - ✔✔Eligibility; death/disability benefits; vesting; form of
benefits; early retirement benefits
✔✔Advantages of contributory DB plans - ✔✔Employees are responsible for their own
financial security. Employees are encouraged to save. Employees may better
appreciate retirement benefits from the employer.
✔✔Disadvantages of DB plans - ✔✔Employee earnings that are contributed are taxed.
Employees dislike deductions to their earnings. Enough employees might not enroll.
More complicated plan admin and recordkeeping.
✔✔Normal retirement age - ✔✔The age at which an individual is eligible to receive
100% of the Social Security benefits they are entitled to. It is based on the month and
year the individual was born and currently ranges from 65 to 67 years of age.
✔✔Early retirement benefits - ✔✔The availability of benefits prior to normal retirement
age
AND ANSWERS SURE A+
✔✔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. Participants have investment risk.
✔✔qualified retirement plan - ✔✔A retirement savings plan approved by the Internal
Revenue Service that provides individuals with a tax benefit. Plan meets requirements
of ERISA as amended.
✔✔Section 415 compensation - ✔✔Compensation used for the purposes of the plan.
✔✔HCE (highly compensated employee) - ✔✔An employee who owns more than 5
percent of the employer, or (2) received compensation in excess of $120,000.
✔✔NHCE (nonhighly compensated employee) - ✔✔An employee who is not an HCE is
a non-highly compensated employee (NHCE).
✔✔Key requirements of an ERISA qualified plan - ✔✔Plan assets cannot be diverted.
Plan is for exclusive benefit of employees and beneficiaries. Permanency requirement.
✔✔Section 401b tests - ✔✔Non-discrimination testing and coverage tests.
, ✔✔ERISA disclosure reporting - ✔✔S P D, S M M, Form 5500, S A R
✔✔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.
✔✔Section 401 a 17 limit on includable compensation - ✔✔$270,000 in 2017. $275,000
in 2018.
✔✔Section 415 Limits Defined Contribution - ✔✔Individual limit $54,000 or 100% of
pay. Company limit 25% of covered payroll.
✔✔Section 415 Limits Defined Benefit - ✔✔Individual limit $220,000 annual benefit for
2018 or 100% of three year average.
✔✔Joint and Survivor Annuity - ✔✔A benefit form required to be offered to married
individual in a pension plan
✔✔Minimum distribution requirement - ✔✔Lifetime benefits must begin no later than
age 70 and a half unless a person is still working.
✔✔Top Heavy Plans - ✔✔Qualified plan becomes top heavy is greater than 60%
benefits go to key employees
✔✔Key employes - ✔✔A 5% owner and anyone earning over $150,000.
✔✔Basic features of DB plans - ✔✔Eligibility; death/disability benefits; vesting; form of
benefits; early retirement benefits
✔✔Advantages of contributory DB plans - ✔✔Employees are responsible for their own
financial security. Employees are encouraged to save. Employees may better
appreciate retirement benefits from the employer.
✔✔Disadvantages of DB plans - ✔✔Employee earnings that are contributed are taxed.
Employees dislike deductions to their earnings. Enough employees might not enroll.
More complicated plan admin and recordkeeping.
✔✔Normal retirement age - ✔✔The age at which an individual is eligible to receive
100% of the Social Security benefits they are entitled to. It is based on the month and
year the individual was born and currently ranges from 65 to 67 years of age.
✔✔Early retirement benefits - ✔✔The availability of benefits prior to normal retirement
age
