TAX 9873 Lecture Notes - Lecture 1: Pension Protection Act Of 2006, Deferral, Profit Sharing
Document Summary
Involves an election by an employee btw receiving compensation in cash or having compensation deferred to a qualified plan. Greater equity exposure = younger; more fixed income = older. Exemption on prohibited transaction regarding investment advice given to participants. 401k election must be in effect before a deferral may be made. Generally a contribution is made after performance of service. Limit under section 402(g) [19,000 ]is increased by amount of catch-up contributions permitted for participants aged 50 or over by the end of the taxable year. Coda which requires more than one year of service or minimum age greater than 21. Actual deferral percentage test: nondiscretionary test applicable to amount of elective contributions under a coda, adp test compares the average of the actual amounts deferred, ignores catch up contributions. Adp test depends on testing year = plan year. Gr: a plan may switch from current to prior year testing if. Plan has used current year in last 5 years.
