Enmgy Q-00002-14-s Series1 Admin-1 Cpe Hour For A Score Of At Least 70%

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| By Cheryl L.

Cheryl L.

Community Contributor

Quizzes Created: 3 | Total Attempts: 440

Questions: 10 | Attempts: 102 | Updated: Mar 20, 2023

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Enmgy Q-00002-14-s Series1 Admin-1 Cpe Hour For A Score Of At Least 70% - Quiz

JAN/FEB 2014 ADMINISTRATION & COMPLIANCE.
Please indicate whether each of the following statements is TRUE or FALSE

Questions and Answers

1.

When a plan sponsor does not make timely ADP test corrections by refunding excess contributions to HCEs, late correction can be done using the one-to-one correction method or pro-rata QNECs.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
When a plan sponsor fails to make timely ADP test corrections by refunding excess contributions to highly compensated employees (HCEs), they can still correct the issue using the one-to-one correction method or pro-rata qualified non-elective contributions (QNECs). This means that even if the corrections are made late, they can still be done in a way that is fair and equitable for all employees. Therefore, the statement is true.

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2.

When a plan sponsor still needs to correct a failed ADP test from a 2012 calendar plan year, SCP self-correction is still an option since the 2-year self-correction window runs from January 1, 2014 to December 31, 2015.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The explanation for the correct answer is that the self-correction window for correcting a failed ADP test from a 2012 calendar plan year runs from January 1, 2014, to December 31, 2015. This means that if a plan sponsor still needs to correct the failed test, they can use the self-correction option within this time frame. Therefore, the statement "True" is correct.

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3.

When a late ADP test correction is being done after the normal 12-month correction period, the otherwise excludable option or disaggregation rules cannot be utilized when determining the extent of corrective actions that will be necessary.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
When a late ADP test correction is being done after the normal 12-month correction period, the otherwise excludable option or disaggregation rules cannot be utilized when determining the extent of corrective actions that will be necessary. This means that when correcting the ADP test after the 12-month period, the employer cannot use certain options or rules that would normally be available to them.

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4.

When a late ADP test correction is being made using QNECs during the self-correction period, Rev. Proc. 2013-12 indicates that QNECs may be allocated using a Targeted QNEC allocation method.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Rev. Proc. 2013-12 does not indicate that QNECs may be allocated using a Targeted QNEC allocation method when making a late ADP test correction during the self-correction period. Therefore, the correct answer is False.

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5.

The VCP formal correction process should always be used as the approach for correcting non-amender defects
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The statement is suggesting that the VCP formal correction process is the appropriate approach for correcting non-amender defects. This implies that there is a specific process in place for addressing these types of defects, and it is recommended to follow this process. Therefore, the correct answer is True.

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6.

The VCP formal correction process should be used for the correction of operational defects when the timing of the operational defects falls outside of the 2-year window period permitted for self-correction.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The VCP formal correction process is used when the timing of operational defects falls outside of the 2-year window period allowed for self-correction. This means that if an operational defect is discovered after the 2-year window has passed, the VCP formal correction process should be used to correct the defect. Therefore, the statement "The VCP formal correction process should be used for the correction of operational defects when the timing of the operational defects falls outside of the 2-year window period permitted for self-correction" is true.

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7.

When making a formal VCP submission to the IRS, if advanced corrective actions were taken before the IRS issues a Compliance Statement, those actions may have to be undone if the IRS does not approve the proposed corrective actions.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
If advanced corrective actions were taken before the IRS issues a Compliance Statement, it means that the actions were taken before the IRS officially approves the proposed corrective actions. In this case, if the IRS does not approve the proposed actions, the advanced corrective actions may have to be undone. This suggests that the actions taken were premature and may not align with the IRS's requirements or standards.

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8.

The VCP formal submission should include a ‘proposed correction method’ and the plan sponsor should understand that this ‘proposed correction method’ is only viable if the IRS agrees to it
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The VCP formal submission requires a "proposed correction method" to be included. This means that the plan sponsor must suggest a way to correct the errors identified in the submission. However, it is important to note that this proposed correction method is only viable if the IRS agrees to it. Therefore, the statement is true.

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9.

The ‘missed deferral’ for an eligible HCE in a plan year when the NHCE ADP was 6.5% and the HCE ADP was 8.5% is equal to 8.5% times the participant's Compensation and the 'missed deferral opportunity' is equal to 50% of the 'missed deferral' amount.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The missed deferral for an eligible Highly Compensated Employee (HCE) in a plan year is calculated by multiplying 8.5% (the HCE ADP) by the participant's Compensation. The missed deferral opportunity is then equal to 50% of the missed deferral amount. This means that the HCE has the opportunity to make up for the missed deferral by contributing 50% of the missed amount. Therefore, the statement "True" is correct.

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10.

When a plan sponsor has improperly excluded employees from receiving the right to make salary deferrals under a Safe Harbor 3% nonelective 401(k) Plan, the formula to determine the 'missed deferral opportunity' is equal to 3% times 50%, or 1.5% times the Compensation for the Plan Year.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
When a plan sponsor excludes employees from receiving the right to make salary deferrals under a Safe Harbor 3% nonelective 401(k) Plan, the missed deferral opportunity is calculated by multiplying 3% by 50% or 1.5% of the Compensation for the Plan Year. This means that the plan sponsor has failed to provide employees with the opportunity to contribute a portion of their salary to the retirement plan, which is a violation. Therefore, the statement is true.

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Current Version
Mar 20, 2023

Quiz Edited by
ProProfs Editorial Team
May 22, 2014

Quiz Created by
Cheryl L.

Enmgy Q-00002-14-s Series1 Admin-1 Cpe Hour For A Score Of At Least 70%

When a plan sponsor does not make timely ADP test corrections by refunding excess contributions to HCEs, late correction can be done using the one-to-one correction method or pro-rata QNECs.

When a plan sponsor still needs to correct a failed ADP test from a 2012 calendar plan year, SCP self-correction is still an option since the 2-year self-correction window runs from January 1, 2014 to December 31, 2015.

When a late ADP test correction is being done after the normal 12-month correction period, the otherwise excludable option or disaggregation rules cannot be utilized when determining the extent of corrective actions that will be necessary.

When a late ADP test correction is being made using QNECs during the self-correction period, Rev. Proc. 2013-12 indicates that QNECs may be allocated using a Targeted QNEC allocation method.

The VCP formal correction process should always be used as the approach for correcting non-amender defects

The VCP formal correction process should be used for the correction of operational defects when the timing of the operational defects falls outside of the 2-year window period permitted for self-correction.

When making a formal VCP submission to the IRS, if advanced corrective actions were taken before the IRS issues a Compliance Statement, those actions may have to be undone if the IRS does not approve the proposed corrective actions.

The VCP formal submission should include a ‘proposed correction method’ and the plan sponsor should understand that this ‘proposed correction method’ is only viable if the IRS agrees to it

The ‘missed deferral’ for an eligible HCE in a plan year when the NHCE ADP was 6.5% and the HCE ADP was 8.5% is equal to 8.5% times the participant's Compensation and the 'missed deferral opportunity' is equal to 50% of the 'missed deferral' amount.

When a plan sponsor has improperly excluded employees from receiving the right to make salary deferrals under a Safe Harbor 3% nonelective 401(k) Plan, the formula to determine the 'missed deferral opportunity' is equal to 3% times 50%, or 1.5% times the Compensation for the Plan Year.