Question # 43

$5,000 or more during the preceding calendar year. 3. SIMPLEs can be either contributory or noncontributory plans, whereas newly established SEP plans are always noncontributory. 4. An employer who wants to share the responsibility of retirement plan funding should establish a SIMPLE rather than a SEP. a. 4 only b. 2 and 3. c. 1, 2, and 4. d. 2, 3, and 4. 43. Which of the following statements regarding 457 plans is (are) true? 1. An individual who defers $19,500 to his 403(b) plan during 2020 can also defer $19,500 to a 457 plan during 2020 (salary and plan permitting). 2. A 457 plan allows an executive of a tax-exempt entity to defer compensation into an ERISA protected trust. 3. In the final three years before normal retirement age, a participant of a government sponsored 457 plan may be able to defer $39,000 (2020) for the plan year. a. 1 only. b. 2 only. c. 1 and 3. d. 2 and 3. 44. Which of the following are characteristics of a SIMPLE? a. Contributions to a SIMPLE are 100% vested at all times. b. The maximum contribution to a SIMPLE is the lesser of 25% of compensation or $57,000 for 2020. c. A SIMPLE permits employer discretionary contributions. d. A SIMPLE imposes a 25% penalty on all distributions prior to age 59%. Chapter 11: Social Security