CPM CPM Retirement Plans & 401(k) Administration 1 — Questions and Answers
Question 1: What is the IRS elective deferral contribution limit for a 401(k) plan for employees under age 50 in 2024?
- $20,500
- $22,500
- $23,000 (Correct answer)
- $19,500
Correct answer: $23,000
The IRS set the 401(k) elective deferral limit at $23,000 for 2024.
Question 2: Which IRS form must an employer file annually to report information about a retirement plan's financial condition and operations?
- Form 5500 (Correct answer)
- Form 5498
- Form 1099-R
- Form W-2
Correct answer: Form 5500
Form 5500 is the annual return/report that plan administrators file with the DOL and IRS.
Question 3: Under the catch-up contribution rules, how much additional can employees age 50 or older contribute to a 401(k) in 2024?
- $5,000
- $6,500
- $7,500 (Correct answer)
- $8,000
Correct answer: $7,500
Employees age 50 or older may contribute an additional $7,500 as a catch-up contribution to a 401(k) in 2024.
Question 4: What is a 'safe harbor' 401(k) plan?
- A plan exempt from all IRS reporting
- A plan that automatically passes ADP/ACP nondiscrimination tests by meeting certain employer contribution requirements (Correct answer)
- A plan that only allows Roth contributions
- A plan restricted to highly compensated employees
Correct answer: A plan that automatically passes ADP/ACP nondiscrimination tests by meeting certain employer contribution requirements
A safe harbor 401(k) satisfies ADP/ACP nondiscrimination tests automatically when the employer makes specified matching or nonelective contributions.
Question 5: What does the term 'vesting schedule' refer to in a 401(k) plan?
- The schedule for filing Form 5500
- The timeline over which employer contributions become the employee's permanent property (Correct answer)
- The deadline for employees to enroll in the plan
- The frequency of investment rebalancing
Correct answer: The timeline over which employer contributions become the employee's permanent property
A vesting schedule defines when employer contributions become non-forfeitable (owned outright) by the employee.
Question 6: What is the maximum combined employer and employee contribution to a 401(k) plan per participant in 2024 (excluding catch-up)?
- $46,000
- $56,000
- $66,000
- $69,000 (Correct answer)
Correct answer: $69,000
The IRC Section 415 limit on total annual additions (employee + employer) to a defined contribution plan is $69,000 for 2024.
CPM CPM Retirement Plans & 401(k) Administration 1
What is the IRS elective deferral contribution limit for a 401(k) plan for employees under age 50 in 2024?