Term
| This plan is a defined benefit plan that is designed to accumulate a balance without any investment risk to the plan participants |
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Definition
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Term
| A cash balance plan will credit each year a ______ which is based on either a flat amount or a percentage of wages |
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Definition
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Term
| The maximum annual pension benefit that can be paid from a defined benefit plan is the lesser of: |
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Definition
| the average consecutive 3 years wages or $195,000 |
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Term
| Since a cash balance plan is structured to accumulate a lump sum and not a pension, the limits above must be converted to ___________ that include _____, and _____ both of which are promulgated by the IRS. |
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Definition
| a single sum based on actuarial factors, mortality, a discount rate |
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Term
| TNC(Target Normal Cost) represents; and For a CBP this is essentially the ____; For a TDBP this is the |
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Definition
| The actuarial present value of the benefit being earned in the current year for all the plan participants earning a benefit; service credit; actuarial present value of the difference between the accrued benefit at the EOY less the BOY |
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Term
ERISA requires that all qualified defined benefit plans satisfy annual funding requirements.
The requirement is to contribute no less than: |
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Definition
| Target Normal Cost (TNC) plus 7 year amortized funding of any shortfall in the Funding Target (FT) less any accumulated Prefunding Balance (PFB). |
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Term
| Is the actuarial present value of the benefits accrued as of the beginning of the year; For a ____ this is essentially the cash balance. And for a _____this is the actuarial present value of the BOY accrued benefit |
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Definition
| Funding Target (FT); Cash Balance Plan (CBP); TDBP |
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Term
| In order to encourage employers to responsibly fund their plans, __________________ . The maximum is ___________ |
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Definition
| Tax deductible contributions can be contributed in excess of the minimum; 1.5 X FT + TNC –Assets (without PFB reduction) |
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Term
| The investment mix used will depend on what three things? |
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Definition
| Whether the plan is a cash balance or traditional db, the age of the participants, and the size of the plan |
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Term
| The recognition under a corporate balance sheet for a _____ is more complicated than under a _____ |
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Definition
| defined benefit plan; dc plan |
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Term
| The amount disclosed as an annual expense is not the amount funded but is what is referred to as the |
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Definition
| Net Periodic Pension Cost (NPPC) |
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Term
| Is the sum of the value of the benefits being earned during the year (service cost) plus the increase in the value of benefits already earned due to the passage of time (interest cost) minus the expected investment return on plan assets plus or minus an amortization of prior actuarial gains or losses. |
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Definition
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Term
| The amount that must be recognized on the balance sheet is the difference between the |
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Definition
| plan assets and the actuarial value of the accrued benefits |
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Term
| Both expense and liability values must be calculated (to the extent that the plan benefits are based on average wages) to reflect |
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Definition
| an expected increase in future wages |
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Term
| A major advantage to qualified plans is the option to |
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Definition
| have distributions rolled over into other qualified plans or IRAs |
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Term
| ____________________ cannot be rolled over nor can benefits that must be distributed upon the attainment of age 70 ½ |
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Definition
| Benefits that are paid out in the form of annuities |
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Term
| Non annuity amounts that are distributed and not rolled over directly to an IRA or other qualified plan are subject to __________ however the actual tax payable may be more or less than this amount subject to the individual’s tax bracket and whether a 10% penalty applies |
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Definition
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Term
| The penalty is waived in the case of |
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Definition
| death, disability, if beyond 59 ½, age 55 and retired from the employer, and at least age 50 receiving substantially equal periodic payments |
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Term
| There are multiple forms of annuity options that are available to plan participants. The most common are: |
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Definition
| Life annuities, life annuities with term certain, and joint and survivor benefits |
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Term
| _________________ provides that the benefit is payable to the participant with a contingent benefit (usually 50%, 66 2/3%, 75%, or 100%) should the participant die first payable to a beneficiary usually the spouse |
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Definition
| The joint and survivor benefit |
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Term
| When calculating the amounts of the alternative optional benefit amounts the process starts with |
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Definition
| determining the benefit amount payable under the plan and the plan’s standard form of benefit |
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Term
| The purpose of is to allow the plan to have certain benefits earned by a participant provided to an alternate payee usually an ex spouse or dependent children; must be in writing, satisfy specific form requirements and signed off by a Judge |
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Definition
| QDRO (Qualified Domestic Relations Orders) |
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