CEBS RPA 1 (New Curriculum) Directing Retirement Plans 1: Assignment 1

What is the basic law that governs employee benefit plans? - Answer- ERISA (Employee Retirement Income Security Act) - 1974 What is the name of the law that created parity between corporate and self-employed retirement plans? - Answer- TEFRA (Tax Equity and Fiscal Responsibility Act) - 1992 This act established PBGC? - Answer- ERISA (Employee Retirement Income Security Act) - 1974 Which act/law created QDROS? - Answer- REA (Retirement Equity Act) - 1984 Which act/law created the concept of "Top Heavy"? - Answer- TEFRA (Tax Equity and Fiscal Responsibility Act) - 1992 Which act/law created excise tax on defined benefit plan reversion of excess assets to plan sponsor? - Answer- OBRA (Omnibus Budget Reconciliation Act) - 1993 Which act/law created SIMPLE Plans? - Answer- Small Business Protection Act - 1996 Which law/act created catch-up contributions for 401(k) plans? - Answer- EGTRRA (Economic Growth and Tax Relief Reconciliation Act) - 2001 Which law/act established means to convert regular 401(k)accounts to Roth accounts? - Answer- American Taxpayer Relief Act - 2013 Define PBGC - Answer- Pension Benefit Guaranty Corporation (Single-employer plan termination insurance) - Federal governmental agency created under Title IV of ERISA. Purpose is to encourage the continuation and maintenance of voluntary private pension plans for participants, provide for timely/uninterrupted payment of pension benefits and beneficiaries under all insures plans & maintain premiums at lowest level consistent with carrying out statutory obligations. Define QDRO - Answer- Qualified Domestic Relations Order - a domestic relations order that satisfies all of the following requirements: 1. Creates/recognizes the existence of an alternate payee's (spouse, former spouse, child or other dependent) right to, or assign to an alternate payee the right to receive all or a portion of the benefit payable with respect to a participant under the plan 2. It must clearly specify certain facts about the participant's benefits (name, last known mailing address of participant and each alternate payee covered by the order; the amount/percent of the participant's benefits to be paid by the plan, or the manner in which such amount is to be determined; the number of payments/periods to which such an order applies; and each plan to which such an order applies 3. It must not alter the amount/form of benefits. QDRO cannot require the plan to provide (a) any type or form or benefit/option, not otherwise provided under the plan; (b) (Actuarially increased benefits; or (c) payment of benefits to an alternate payee when such benefits are already required to be paid to another alternate payee under another order previously determined to be a QDRO What is a SIMPLE plan? - Answer- Savings Incentive Match Plans for Employees - the intent of these plans is to create retirement savings vehicle for small employes that is not subject to complex rules associated with qualified plans (i.e. nondiscim req's and top-heavy rules) Who is eligible for SIMPLE plans? - Answer- Employers with 100 or fewer employees who received at least $5k in comp from the employer, in the preceding year. How much may an employee contribute to a SIMPLE plan? - Answer- Employees may contribute up to $12,500 per year in 2017 and requires employers to make matching contributions What three things make up the Tripod of economic security/three-legged stool? - Answer- Risk is met through one or more of the following: 1. personal savings (including individual insurance and annuities) 2. employer-sponsored retirement plans (private plans) 3. social insurance programs What are the basic economic problems facing the aged include what? - Answer- 1. The desire of aged individuals to maintain, to a high degree, their preretirement standard of living in their retirement years 2. The declining employment opportunities available to the aged 3. The relatively low individual savings of the aged b/c of higher income taxes, increased consumption patterns