Qualified 401(k) Administrator (QKA) 2 Practice Exam

These questions are part of the practice quiz. Start practicing

• For plans to be permissively aggregated for coverage, what must they have in common?
• What is the primary role of a plan sponsor in coverage testing?
• Is it true or false that if a required aggregation group's top-heavy ratio exceeds 60 percent, every plan in the group is considered top-heavy?
• Does the calendar year data election apply only to the compensation test and not the 5% owner test?
• Is it true that a plan must state its coverage testing method in the plan document?
• How is the excise tax on excess contributions typically calculated?
• When should an employer consider adopting a new testing methodology for coverage?
• If the plan year ends December 31, 2022, when does the regulatory correction period end?
• When must QNECs be contributed to be counted for the ADP or ACP test?
• What is true about the top-heavy ratio in plans?
• True or false: Post-severance compensation that meets the criteria for inclusion in 415 compensation must be included for plan purposes?
• If an employee makes a one-time, irrevocable election not to participate in a 401(k) plan, how does it affect their inclusion in the ADP test?
• How many tests are run when using the early participation test for ADP/ACP?
• What is the minimum amount for the Fidelity Bond if the calculated 10% would result in an amount below $1,000?
• What is required of a plan when determining QNECs for eligibility in the ADP test?
• What is commonly referred to as the anti-abuse rule?
• Which condition must be met for an employee to be considered a leased employee?
• Are SIMPLE IRAs exempt from 5500 filings?
• In which case would an employer be liable for non-compliance with the ADP/ACP testing?
• Are all taxable fringe benefits included in all base definitions of 415 compensation? True or False?
• When switching between testing methods for ADP/ACP, when must the amendment be made?
• True or false: For post-severance compensation to be included in 415 compensation, payments must be made by the earlier of 2.5 months post-severance or the last day of the compensation determination year?
• What is one of the key regulatory requirements concerning excess contributions in a retirement plan?
• True or false: If elective deferrals are recharacterized to after-tax contributions, those contributions are excluded from ACP testing.
• True or False: An employee's ADR is always the same when compared to their elective deferral amount divided by their regular compensation.
• After a distribution, if the deferral percentages of HCEs are recalculated, what is likely to be the outcome for the ADP test?
• What form is used for the employer to pay the excise tax due on excess contributions, and when is it due?
• Small plans may file the Form 5500 or the Form _______.
• What percentage of employees does the top-paid group election limit for the lookback year?
• Can the Delinquent Filer Voluntary Compliance Program (DFVC) be used if your plan is under audit?
• What is the IRC code section that limits the amount of compensation taken into account for allocations?
• When considering top-heavy status, which of the following is true regarding aggregation?
• True or False: The 401(a)(17) limit is not considered when calculating employee ADR.
• Is it true that a SIMPLE 401(k) plan is deemed to pass the ADP test?
• Which disclosure shows an investment chart including returns and fees?
• Which plans are required to file the 5500 schedule A?
• What must be documented when installing a recharacterization rule in a plan?
• What adjustment is the maximum HCE ADP if the NHCE ADP is more than 8%?
• What are the types of post-severance compensation eligible for inclusion in 415 compensation?
• Which of the following statements about the Summary Annual Report is accurate?
• Which schedule is primarily focused on providing financial information for plans?
• True or False: QNECs associated with an employer's obligation under the Davis-Bacon Act are limited to 5% of compensation.
• What is the status of the 10 percent penalty tax under IRC §72(t) for distributions made prior to age 59½ regarding corrective distributions?
• If the employer did not make a matching contribution in the prior year, what impact will that have on the ACP test?
• Which of the following is NOT one of the exclusions when determining the top-paid group?
• Which plans must file the 5500 schedule R?
• What is the relationship between the top-heavy minimum contribution and the highest allocation rate of key employees?
• Which plan(s) are required to file the 5500 schedule G?
• Which 5500 schedule contains financial schedules?
• To obtain the 2.5 month extension for the Form 5500, one must file which form?
• Which plan(s) are required to file the 5500 schedule D?
• Is it true or false that all top-heavy determinations are based on data from the determination period, typically the plan year containing the determination date?
• One requirement for being able to file the Form 5500-SF is that the plan must cover fewer than _____ participants.
• What is one of the avenues that can be taken if the ratio percentage test fails?
• Can QNECs be treated as elective deferrals in the ADP test?
• What happens to owners who do not meet the compensation threshold when determining HCEs?
• For non-first year plans, when is the top-heavy determination date?
• How often must the SPD be updated if there have been amendments made?
• What are the three types of plans that are deemed to satisfy coverage?
• True or False: A plan must apply the recharacterization rule before shifting elective deferrals.
• Will a husband and wife who each owned 2.5% of the company be considered HCEs?
• True or false; the 5500 and 5500-SF are filed to the IRS?
• True or false: A failure to correct an ADP violation timely results in the taxation of employees' elective contributions, but a failure to correct the ACP test timely results in disqualification of the entire plan.
• What form must sole proprietors use to report earned income?
• Which method involves a two-step process to determine the amount distributed to each HCE who is an eligible employee during an ADP failure year?
• How many months does a plan have to refund excess contributions to HCEs to avoid the excise tax?
• Which value does NOT belong to the ARA code of conduct regarding service performance?
• Which of the following statements is true regarding the aggregation of plans for coverage testing?
• What happens to the QNECs that exceed 5% of compensation?
• Is the decision on including QNECs in the ADP or ACP test an administrative discretion?
• Which of the following statements about catch-up contributions is true?
• True or False: An employee with 2% ownership in one corporation and 4% in another qualifies for the 5-percent owner test.
• A coverage violation not corrected within the regulatory correction period is considered what type of failure?
• What level of communication is expected from a plan administrator regarding fees and expenses charged to participants?
• Do the top-heavy minimum benefit requirements apply to union employees?
• Which of the following statements is true regarding key employee definition?
• Which types of rollovers are included in the top-heavy ratio?
• Is it permitted to have allocation conditions on the top-heavy minimum contribution?
• Excess deferrals over the 401(a)(30) limit are excluded from the participant's ADR if they are which type of employee?
• If a top-heavy plan disaggregates otherwise excludable employees for testing, who is entitled to the top-heavy minimum?
• What is the primary consequence of not correcting an ADP violation timely?
• What is the benefit of using the prior year testing method?
• What is the most common form of election under a cash or deferred arrangement (CODA)?
• According to the ARA code of conduct, what is the correct combination of values that an ARA member must perform services with?
• True or false: Excess Group Term Life Insurance is included in W-2 compensation if it exceeds 50,000?
• A plan makes a QNEC to increase the ADRs of their NHCEs in order to pass the ADP test. Which coverage test is that QNEC tested under?
• At what percentage is a plan considered top-heavy?
• What must an employer do before making an 11(g) amendment for a coverage failure?
• If an employer maintains more than one plan, what must they do for determining top-heavy status?
• How do you calculate the ratio percentage given the NHCE and HCE ratios?
• The Form______ is for plans that only cover owners of a company and their spouses.
• For employees who don’t meet allocation conditions, are they still counted in ADP testing calculations?
• True or False: An employee under 21 is excluded from the top-paid group.
• Which of the following would be an example of a safe harbor exclusion specific to Highly Compensated Employees (HCEs)?
• How is the relevant compensation calculated for the deduction limit under IRC 404(a)(3)?
• If a plan has different age/service requirements for different job classes, how should one determine excludable employees?
• For the 1% owner test, what compensation threshold must an individual exceed to be considered a key employee?
• Which of the following is a requirement for small plans filing Form 5500-SF?
• Which of these describes a type of fringe benefit?
• Are SIMPLE 401(k)s subject to 5500 filings?
• True or false; a one-participant plan with assets less than $500,000 is not required to file a Form 5500-EZ.
• What form is used to report deferred vested benefits to the IRS and the Social Security Administration?
• The plan administrator must provide a copy of the SMM to participants within how many days after the plan year ends when an amendment is adopted?
• When applying the five-year rule, if the current year testing method was used, what does that imply?
• True or false; the filing deadline for Forms 5500 and the schedules (without extension) is the last day of the seventh month following the close of the plan year?
• Is an unqualified audit favorable for a pension plan?
• Can the calendar year data election be made for any plan type?
• Is an employee's compensation limited by the 401(a)(17) limit before calculating their ADR?
• True or false; the DOL 5500 late filing penalty is $2,330 per day with an unlimited maximum amount?
• Is it true or false that for first year plans, the top-heavy determination date is the last day of the prior plan year?
• If a plan fails the ADP test in 2021 and corrective distributions are made in 2022, in which year's income must the taxable portion be included?
• When must the Summary Annual Report be provided to plan participants without an extension?
• What requirement is specifically mentioned regarding allocation conditions for top-heavy contributions?
• Which of the following factors does NOT determine a leased employee?
• True or false: Covered service providers are not required to provide the 408(b)(2) disclosures.
• True or false; Forms 5500-EZ and 8955-SSA are filed with the IRS?
• What determines whether a plan passes the ratio percentage test?
• A plan is considered top-heavy if the key employees' balances exceed which percent of total account balances?
• How is the maximum HCE ADP determined when NHCE ADP is between 2% - 8%?
• Which coverage test are QMACs tested under?
• Under which condition can all employer matching contributions satisfy the definition of QMACs and eliminate the ACP test?
• What defines "otherwise excludable employees" in a plan?
• What rule prohibits using the top-paid group election for one test while opting out for another in the same plan year?
• How many times must the 401(a)(4) nondiscrimination requirements be addressed for QNECs?
• Does a misdemeanor for public intoxication violate the ARA code of conduct?
• True or False: Employers may contribute up to a set percentage of total compensation for all employees in a year.
• What is the maximum number of HCEs allowed in the top-paid group election based on rank by compensation?
• Can QNECs be allocated based on whether a participant has deferred?
• A primary feature of the current year method for the ACP test is that it uses which year's contributions?
• What is the daily penalty for each form under the Delinquent Filer Voluntary Compliance Program?
• True or False: If any QMACs are used in the ADP test, all QMACs must be disregarded in the ACP test.
• Why is the anti-abuse rule implemented in 401(k) testing?
• Can allocation conditions apply to both QNECs and QMACs?
• What is the maximum percentage of compensation that QNECs allocated to a participant can be, in order to be considered eligible for inclusion in the ADP test?
• Which element is not considered in the calculation of QMACs for use in the ADP test?
• What does the 10 percent cap refer to in the context of key employees?
• What is the minimum frequency at which the plan administrator must explain any fees and expenses charged for individual services?
• Is it possible for a plan to run their 401(m) coverage test disaggregated but their ADP test aggregated?
• If an employee is part of two related plans that are both top-heavy, are they required to receive the top-heavy minimum in each plan?
• Which test needs to be satisfied if someone owns more than 1% of a company for key employee determination?
• Which of the following is NOT considered post-severance compensation?
• Are QNECs eligible for hardship withdrawals as of 2019?
• Must QNECs be contributed within a specific time frame to be eligible for inclusion in ADP tests?
• Which plans must provide information on distributions made from a record keeper's EIN in their 5500 schedule R?
• Which type of Fidelity Bond provides coverage for all of the insured's officers and employees with no schedule?
• What type of contributions do QMACs represent?
• Is exaggerating qualifications considered a violation under the Advertising section of the ARA code of conduct?
• What type of contributions fall under the deductions permitted by IRC 404(a)(3)?
• True or False: If elective deferrals are shifted to the ACP test, the ADP test must pass both pre-shift and post-shift.
• Which of these is NOT one of the 414(s) safe harbor exclusions?
• On what basis is the HCE determination made for related employers?
• True or False: The 404(a)(3) deduction limit and the 401(a)(17) dollar limit overlap for deduction calculations.
• Is the Self-Correction Program (SCP) available to correct demographic failures?
• What is the maximum number of participants a plan can have to qualify as a small plan for filing the Form 5500-SF?
• Among the criteria for key employee determination, which aspect pertains specifically to ownership?
• True or False: A participant's contribution rate includes all QNECs and any QMACs included in the ADP test for the plan year divided by the participant's compensation.
• Are there any specific requirements for employees to qualify for top-heavy minimum contributions?
• What is the recommended method for an ARA member to address a conflict of interest?
• Are excess contributions under the recharacterization method determined the same way as under corrective distributions?
• Can an 11(g) amendment correct a coverage failure by decreasing allocations or accruals for HCEs?
• Employees excluded from the numerical coverage testing are known as what type of employees?
• After refunds are made to Highly Compensated Employees (HCEs), what must happen regarding the ADP test?
• In the context of coverage testing, which of the following is NOT considered an excludable employee?
• Is it true or false that if a plan provides an employer match based on employee deferrals, both components must use the same definition of compensation?
• What is the main purpose of a salary reduction agreement?
• If an ARA member has a conflict of interest but all principals agree to their services, what can they do?
• Under what circumstance do both HCE tests apply?
• Is spousal consent required for distributions classified as corrective?
• What is the correct method for determining the total amount to be distributed when using the leveling method?
• Service providers paid by the plan via indirect compensation are known as what type of service providers?
• Which plans are required to file the 5500 schedule C?
• Can an employee who terminated with 306 hours be considered excludable for coverage testing of the 401(m) component?
• With a qualified audit, how is the plan's financial information handled?
• If a corrective distribution includes both pre-tax and Roth deferral amounts, how many Forms 1099-R are required?
• Which 5500 schedule contains information on the entity sponsoring a Direct Filing Entity?
• Which 5500 schedule contains Financial Information for Small Plans?
• True or false; the Form 5500 filing deadlines are identical to those for Form 8955-SSA?
• Can an employer change their coverage test for otherwise excludable employees back to aggregated after disaggregating?
• Which of the following is NOT a base definition of 415 compensation?
• Can a plan allow employees to make rollovers into the plan before they become participants?
• What must happen for nonqualified deferred compensation to be included in 415 compensation?
• What is the overall purpose of the ADP test in a 401(k) plan?
• What is the deadline for adopting a corrective 11(g) amendment to fix a coverage failure?
• With an unqualified audit, how is the plan's financial information managed?
• Are small plans required to be audited if at least 90% of assets are invested in qualifying plan assets?
• True or false: SIMPLE IRAs and SEPs are exempt from the 404(a)(5) disclosure requirements.
• True or False: Elective deferrals can be shifted to the ACP test.
• Which exclusion applies to employees working less than a specified hour threshold in a week?
• What is the significance of the 5% minimum gateway under 415 compensation?
• What is the condition under which an amendment changing from current year testing to prior year testing is permitted?
• True or false; a final Form 5500-EZ is always required for terminated plans with a one-participant plan?
• Is spousal consent required for corrective distributions?
• True or False: A salary reduction agreement can apply to bonuses or commissions.
• When a plan is terminating, does the termination date affect the plan year for performing coverage tests?
• True or False: If an employee has ownership in related organizations, this can affect the 5-percent owner test.
• If a plan has used the current testing method all previous years, does it satisfy the five-year rule even if it was less than five years?
• For large plans, under which condition must the SPD be provided in the participant's primary language?
• What condition must be met for a small plan to be required to provide an SPD in a non-English language?
• If a plan fails a coverage test, what is the immediate next step an employer should take?
• Non-vested matching amounts associated with excess deferrals must be forfeited, what are these called?
• What is Ella's matching contribution given her compensation and plan provisions?
• What defines an employee's ADR?
• The filing of the Form 5500 is required by Title ____ of ERISA.
• Which contributions, if any, allow plans to avoid the ACP test entirely?
• Is it true or false that shareholders of S-corps can have both W-2 and K-1 compensation counted for plan purposes?
• True or false; Forms 5500 and 8955-SSA must be filed at the same time?
• Is a participant who made excess deferrals part of the NHCE calculation in regard to ADR?
• Is it true or false that 415 compensation must be used for allocating employer contributions?
• Which 5500 schedule is designed for indicating the financial health of smaller plans?
• Can QNECs and QMACs count towards the top-heavy minimum requirement?
• If a plan shifts deferrals to help pass the ACP test, must both tests be run on the same method?
• True or false: Noncash tips are included in W-2 compensation.
• Can a plan use different testing methods for the ADP and ACP tests?
• In which schedule is information on service provider fees required to be disclosed?
• Which type of compensation is used for nondiscrimination testing purposes?
• Upon receiving a corrective distribution, how is it likely to affect HCEs’ reported income for the year it occurs?
• Excess deferrals over the 401(a)(30) limit are included in the participant's ADR if he or she is classified as what?
• Does the 20% mandatory withholding for federal income tax apply to corrective distributions?
• What does the early participation test include regarding NHCEs and HCEs?
• What form is used to report corrective distributions?
• Which of the following describes the lowest NHCE contribution rate for a plan's representative contribution rate?
• What type of Fidelity Bond covers a named individual?
• True or false; filing requirements for Form 5500-EZ apply only to multi-participant plans.
• Which of the following must be determined using 415 compensation?
• Does the election of the prior year testing method affect the HCE data used in ADP/ACP tests?
• Do forfeitures count towards the top-heavy minimum requirement?
• For a first plan year using prior year testing, what is assumed for the ADP/ACP of the NHCEs?
• Is it true or false that salary reductions are considered a form of indirect compensation?
• True or false: Excess Roth deferrals distributed to highly compensated employees (HCEs) incur no taxes, although the earnings on them are taxed.
• What is the compensation threshold for satisfying the officer owner test in 2021?
• True or False: All testing, including elective deferral shifting, must be completed before assessing excess contributions eligible for recharacterization.
• True or false: Excluding all fringe benefits from 414(s) compensation is considered a safe harbor exclusion.
• Is it true that the testing method designation (prior year or current year) refers to the plan year data?
• Excess Group Term Life insurance is included in all definitions of 415 compensation. True or False?
• Can a plan elect to use the early participation test for the sake of satisfying coverage?
• An employee who cannot make elective deferrals due to IRC limitations is treated as an eligible employee for the ADP test under which condition?
• True or False: Lookback year compensation is not relevant for determining HCE status.
• Which of the following applies to safe harbor plans during the five-year rule?
• True or false: Only excess contributions that cannot be recharacterized as catch-up contributions are subject to corrective distribution or recharacterization as after-tax employee contributions.
• What is the maximum time frame by which a participant must receive their Summary Plan Description (SPD) after they first become a participant?
• Are employees excluded from participation due to job classification included in the ADP test?
• What is the primary purpose of the 414(s) test?
• True or False: To meet the 401(a)(30) limit, excess deferrals automatically count towards the ADR.
• If a plan is classified as an EACA plan, how many months does the plan have to refund excess contributions?
• True or false; all large plans are required to file Form 5500.
• What is the maximum required bond amount generally set at?
• Are corrective distributions and the leveling method used for the same purpose?
• What is the minimum percentage requirement for a Fidelity Bond based on the value of the plan assets?
• Are noncash tips excluded from W-2 compensation? True or False?
• True or false; owner-only plans that cover only the owners and their spouses are not subject to Title I of ERISA.
• For the sake of corrective distributions, how is the taxable portion treated for the HCE's gross income?
• What is required of the recipient employer regarding leased employees?
• What must be satisfied when making the decision to include QNECs in the ADRs?
• What is an important rule that prevents the reduction of benefits already allocated to HCEs?
• Are the account balances of former-key employees considered in the top-heavy ratio?
• If the NHCE ratio is 32.2% and the HCE ratio is 46%, does this plan pass or fail the ratio percentage test?
• What happens if corrective distributions under the ADP test only provide amounts from pre-tax accounts?
• True or false; if a plan has been filing as a small plan and its participant level rises above 99 but not above 120, it may continue to file as a small plan for 5 years.
• True or false: To calculate the ratio percentage, you divide the HCE ratio by the NHCE ratio.
• In which instance would excess Group Term Life Insurance be excluded from W-2 compensation?
• What is the top-heavy minimum contribution due to all non-key employees based on?
• What is the correct corrective action period if a plan fails the ADP test?
• Which of the following is an example of indirect compensation?
• Is it true or false that no more than 70 officers can be treated as key employees, even if the 10 percent cap allows for more?
• What portion of a corrective distribution is included in employees' gross income when it is distributed?
• Is it true that plans may restrict how often employees can change their deferral elections?
• If a plan fails the ratio percentage test, what is an option to bring more participants into the plan?
• True or False: Elective deferrals shifted to the ACP test are included in the 401(m) coverage test.
• If an employee does not receive an employer matching contribution due to not meeting allocation conditions, are they included in the ACP test?
• Employees who are barred from participation due to their job classification are considered what type of employees?
• Which form must partnerships use to report earned income?
• Which of the following is included in the 414(s) safe harbor exclusions?
• How much will Stella Brown actually receive refunded if she has a total excess contribution of $4,300 of matching contributions and $700 of allocable earnings with 60% vesting?
• What happens if the employee contribution rates are significantly changing toward the end of the year?
• Is testing coverage disaggregated for otherwise excludable employees beneficial?
• What happens if the number of years a plan was in existence is less than five regarding the five-year rule?
• Which 5500 schedule contains Pension Plan information?
• What is the maximum deduction limit for employer contributions under IRC 404(a)(3)?
• Are nonresident aliens considered employees for HCE determination?
• How should the plan's financial data be reported in a qualified audit?
• For small plans, what percentage of non-English literate participants mandates the provision of the SPD in that language?
• True or False: Current year compensation is considered in the HCE determination process.
• What is the maximum number of officers that may be considered key employees in a given year?
• Which of the following describes a demographic failure?
• Which coverage test are after-tax contributions tested under?
• How long after an SPD has been amended does the plan administrator have to update it?
• Which test specifically assesses after-tax contributions?
• If a company's first year is the same as the plan's first year, what applies for HCE determination?
• When an HCE participates in multiple plans with related employers, what is required regarding their elective deferrals?
• True or false; the IRS 5500 late filing penalty is $250 per day with a maximum penalty of $150,000?
• Which 5500 schedule contains Financial Information for Large Plans?
• What is the primary purpose of providing the SPD to participants?
• Which 5500 schedule is NOT primarily focused on financial performance?
• True or false; a final Form 5500-EZ is not needed for plans with assets exceeding $250,000.
• Catch-up contributions are counted in determining an employee's ADR. True or False?
• What is the maximum HCE ADP when NHCE ADP is less than 2%?
• What type of Fidelity Bond covers a number of named individuals or each of the occupants of positions listed in the schedule?
• What percentage is the excise tax on excess contributions not distributed timely?
• Which coverage test is the Safe Harbor Nonelective tested under?
• When applying the top-paid group election, whose compensation must be added back to determine HCEs?
• True or false: Blackout notices must be provided at least 30 days prior to the blackout period.
• If Hayley was hired on 7/25/21 and completed her service requirement by the end of her eligibility computation period, is she excludable for the 2022 plan year?
• What is the most popular testing period used in plans?
• What is the main purpose of making a QNEC?
• Which 5500 schedule contains service provider information?
• Can the "terminated with 500 or fewer hours" rule apply to the elective deferral component of a plan?
• What action must be taken if there are excess Roth deferrals attributed to an HCE?
• Are the same testing methods required for both coverage tests and non-discrimination tests?
• Which of the following statements about post-severance compensation is true?
• Which 5500 schedule contains insurance information?
• Which Form is designated for plans that only cover a single owner and their spouse?
• True or false; one requirement for filing the Form 5500-SF is that the plan must hold no employer securities at any time during the plan year.
• Do unrelated rollovers affect the top-heavy ratio?
• What is the name of the disclosure required to be provided to plan sponsors by some service providers?
• Can allocation conditions for QNECs specify a requirement such as working a minimum number of hours?
• Is the determination year considered the current plan year for the purpose of HCE determination?
• The 10% employer excise tax on excess contributions is calculated before which adjustment?
• Which method for allocating nonelective employer contributions is considered nondiscriminatory?