RET.11.HO.3 - 2015MoneyEducation 11th Edition RETIREMENT...

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©2015 Money Education Retirement Planning, 11th Ed. Chapter 3 1 © 2015 Money Education CH 3 | Qualified Plan Overview 1 Retirement Planning and Employee Benefits CHAPTER 3: INTRODUCTION TO RETIREMENT PLANNING 11 th Edition RETIREMENT PLANNING AND EMPLOYEE BENEFITS Michael A. Dalton | James F. Dalton © 2015 Money Education CH 3 | Qualified Plan Overview 2 Retirement Planning and Employee Benefits Chapter 3: Learning Objectives 1. Understand the history of employer-sponsored retirement plans. 2. Understand the primary differences between pension plans and profit sharing. 3. Understand the primary differences between defined benefit plans and defined contribution plans. 4. Be able to explain the advantages of a qualified plan. 5. Describe the requirements for a plan to be classified as a qualified plan under IRC §401(a). 6. Calculate whether a plan meets the coverage tests for a qualified plan. 7. Determine whether an employee is classified as highly compensated or a key employee. 8. Identify employees that meet the eligibility rules and those than can be excluded from the plan. 9. Explain the impact of top-heavy status on defined benefit and defined contribution plans. 10. Compare the vesting schedules for defined contribution, defined benefit and cash balance plans. 11. Explain the funding limitations for defined contribution plans, defined benefit plans and the limits on employers who sponsor both. © 2015 Money Education CH 3 | Qualified Plan Overview 3 Retirement Planning and Employee Benefits History 19 th century – first company sponsored pension plans in the railroad industry 1921 – Congress provides preferential treatment to retirement plans. 1930s & 40s – Congress provided that retirement funds had to be used for employees and plans could not discriminate in favor of highly compensated employees. 1974 – ERISA enacted to protect retirement and pension benefits – basis for qualified plans today.
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