QKA-2 Exam
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1. IRC §415(c) Compensation Uses IDing HCEs
IDing Key Employees for top-heavy testing
Calculating min. contribution to non-key employ-
ees under top-heavy plans
2. 3 Permissible definitions of IRC 415 Current includable compensation
Comp (Wages/Salaries/Etc)
W-2 Compensation
Wages for Income Tax Withholding
3. IRC 414 Comp Must be used for nondiscrimination test
All 415 safe harbor compensation definitions are
414 comp
4. Allowable Safe Harbor Modifications to 1. Can be reduced by reimbursements/expense
415 Compensation allowances
2. Can include elective deferrals made by employ-
er on behalf of employees
3. Can exclude any portion of comp earned by only
HCEs
5. Earned Income Describes the compensation of a self-employed
individual who is covered by the plan
6. Types of Compensation Direct - Wages/Salary/Overtime
Indirect - Benefits/Insurance/etc
7. IRC 415 Compensation Statutory definition for compensation. The total
gross pay of the employee (Add back any reduc-
tions)
8. Plan Compensation May be 415 compensation but the plan has many
reasons to choose other definitions
, QKA-2 Exam
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9. Common Adjustments to Plan Com- 1. Exclude compensation before becoming a par-
pensation ticipant
2. Excluding Deferrals
3. Exclude comp from related employer who is not
part of plan
4. Comp paid by a division or different location
10. HCE Highly Compensate Employee
Greater than 5% ownership in plan year or prior
year
OR
Comp is higher than limit for previous year ($155k
for 2024) (look at previous year comp)
11. Ownership Attribution Spouse to Spouse
From parent to child
From child to parent
From child to grandparent
NO ATTRIBUTION BETWEEN SIBILINGS
12. Top Paid Group Election Limits HCEs from comp test to the top 20% of
employees
Useful for small plans with many HCEs
13. Exclusions for Top Paid Group Election Under 21
Calculation less than 6 month service by end of plan year
work less than 17.5 hours a week
work less than 6 months a year
Union
14. Coverage Plan must benefit a certain amount of NHCEs in
order to be qualified
, QKA-2 Exam
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15. Types of minimum coverage tests Ratio % Test
Average Benefits Test
16. Ratio Percentage Test % of NHC Covered / % of HC Covered >= 70%
17. Situations where a coverage test is not Plan only covers NHCEs
required Plan only consists of HCE Non-Excludable employ-
ees
Collectively bargained plans
18. Mandatory Disaggregation During coverage testing each part of the plan is
tested as a separate plan
19. What each "plan" covers in coverage 401(a) - Employer nonelective and QNEC
Testing 401(k)- Elective Deferrals
401(m)- After tax contribution, matching, QMAC
20. Otherwise Excludable Employees Group of employees who are participants in the
plan but would be excluded if plan uses max eli-
gibility req
Need to run coverage test 2 times, one for statu-
tory employees one for otherwise excludable
21. Non-Excludable Employee employee who does not fall into excludable em-
ployee categories for coverage testing
22. Excludable Employees Can be excluded without negatively affecting test-
ing results
Must fall into 1 of four groups
1. Did not meet age/service requirements
2. Terminated Employees with less than 501
Study online at https://quizlet.com/_dde27f
1. IRC §415(c) Compensation Uses IDing HCEs
IDing Key Employees for top-heavy testing
Calculating min. contribution to non-key employ-
ees under top-heavy plans
2. 3 Permissible definitions of IRC 415 Current includable compensation
Comp (Wages/Salaries/Etc)
W-2 Compensation
Wages for Income Tax Withholding
3. IRC 414 Comp Must be used for nondiscrimination test
All 415 safe harbor compensation definitions are
414 comp
4. Allowable Safe Harbor Modifications to 1. Can be reduced by reimbursements/expense
415 Compensation allowances
2. Can include elective deferrals made by employ-
er on behalf of employees
3. Can exclude any portion of comp earned by only
HCEs
5. Earned Income Describes the compensation of a self-employed
individual who is covered by the plan
6. Types of Compensation Direct - Wages/Salary/Overtime
Indirect - Benefits/Insurance/etc
7. IRC 415 Compensation Statutory definition for compensation. The total
gross pay of the employee (Add back any reduc-
tions)
8. Plan Compensation May be 415 compensation but the plan has many
reasons to choose other definitions
, QKA-2 Exam
Study online at https://quizlet.com/_dde27f
9. Common Adjustments to Plan Com- 1. Exclude compensation before becoming a par-
pensation ticipant
2. Excluding Deferrals
3. Exclude comp from related employer who is not
part of plan
4. Comp paid by a division or different location
10. HCE Highly Compensate Employee
Greater than 5% ownership in plan year or prior
year
OR
Comp is higher than limit for previous year ($155k
for 2024) (look at previous year comp)
11. Ownership Attribution Spouse to Spouse
From parent to child
From child to parent
From child to grandparent
NO ATTRIBUTION BETWEEN SIBILINGS
12. Top Paid Group Election Limits HCEs from comp test to the top 20% of
employees
Useful for small plans with many HCEs
13. Exclusions for Top Paid Group Election Under 21
Calculation less than 6 month service by end of plan year
work less than 17.5 hours a week
work less than 6 months a year
Union
14. Coverage Plan must benefit a certain amount of NHCEs in
order to be qualified
, QKA-2 Exam
Study online at https://quizlet.com/_dde27f
15. Types of minimum coverage tests Ratio % Test
Average Benefits Test
16. Ratio Percentage Test % of NHC Covered / % of HC Covered >= 70%
17. Situations where a coverage test is not Plan only covers NHCEs
required Plan only consists of HCE Non-Excludable employ-
ees
Collectively bargained plans
18. Mandatory Disaggregation During coverage testing each part of the plan is
tested as a separate plan
19. What each "plan" covers in coverage 401(a) - Employer nonelective and QNEC
Testing 401(k)- Elective Deferrals
401(m)- After tax contribution, matching, QMAC
20. Otherwise Excludable Employees Group of employees who are participants in the
plan but would be excluded if plan uses max eli-
gibility req
Need to run coverage test 2 times, one for statu-
tory employees one for otherwise excludable
21. Non-Excludable Employee employee who does not fall into excludable em-
ployee categories for coverage testing
22. Excludable Employees Can be excluded without negatively affecting test-
ing results
Must fall into 1 of four groups
1. Did not meet age/service requirements
2. Terminated Employees with less than 501
