Internal Revenue Service Enrolled Retirement Plan Agent Special Enrollment Examination (ERPA-SEE) Syllabus. Part I: Compliance and Operational Issues

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1 Internal Revenue Service Enrolled Retirement Plan Agent Special Enrollment Examination (ERPA-SEE) Syllabus Part I: Compliance and Operational Issues I. General Description The syllabus for Part I of the ERPA-SEE outlines issues affecting compliance and operation. These issues include participation, coverage, vesting, contributions, allocation and accruals, limits, nondiscrimination testing (including ADP and ACP), top-heavy, related employer issues, elective deferrals and deductibility. Part I also includes the legal framework under which retirement plans operate. II. Learning Objectives A. Participation, Coverage and Vesting 1. Identify allowable minimum age and service requirements for eligibility. 2. Define the eligibility computation period. 3. Determine breaks-in-service and identify how they impact eligibility and vesting. 4. Identify permissible plan entry dates. 5. Determine which plans must meet minimum coverage requirements. 6. Identify excludable employees for coverage testing. 7. Calculate the ratio percentage test to determine whether coverage is satisfied. 8. Define the minimum participation rules applicable to a defined benefit plan. 9. Identify permissible vesting schedules, vesting service and vesting changes under PPA. 10. Identify impact of a change of vesting schedule. 11. Determine when forfeitures may occur and their permitted uses. B. Contributions, Allocation and Benefit Formulas and Accrual Rules 1. Distinguish among the types of contributions made to a qualified plan. 2. Differentiate between a plan contribution and a participant allocation. ERPA-SEE Syllabus Page 1 of 8

2 3. Identify conditions that may be imposed on a participant to receive an allocation. 4. Identify whether the defined benefit plan benefit formula satisfies permitted disparity rules. 5. Explain the difference between safe harbor allocation and non-safe harbor allocation. 6. Calculate an accrued benefit for a participant in a defined benefit plan. 7. Calculate career average and final average pay benefit formulas. 8. Identify characteristics of a cash balance/hybrid plan and describe the impact of PPA on cash balance conversions. C. Limitations on Benefits, Contributions and Compensation 1. Identify annual limitations on elective deferrals. 2. Calculate permissible catch-up contributions for catch-up eligible participants. 3. Determine the taxation of excess deferrals and identify effects of the timing of correction. 4. Explain the annual additions limit for defined contribution plans. 5. Calculate maximum annual additions limit under a defined contribution plan. 6. Identify the basic limitation on benefits from a defined benefit plan. 7. Calculate the maximum benefit limit under a defined benefit plan. 8. Explain the effects of a short plan year. 9. Calculate the maximum compensation used for determining contributions or benefits. 10. Describe the definition of IRC 414(s) compensation and contrast with IRC 415 compensation, including what compensation can be excluded. 11. Calculate the compensation ratios in an IRC 414(s) test. D. General Nondiscrimination Rules 1. Define a highly compensated employee. 2. Describe the top-paid group rule, including which employees can be excluded. 3. Identify plans that use general test for nondiscrimination in amount of benefits and contributions. 4. Describe a safe harbor design for defined contribution and defined benefit plans to satisfy the nondiscrimination rules. 5. Describe the uniformity requirements for benefits under a design-based safe harbor defined benefit plan. ERPA-SEE Syllabus Page 2 of 8

3 6. Identify the determination and grouping of allocation rates and benefit accrual rates. 7. Identify the use of aggregation, disaggregation and restructuring on nondiscrimination testing. 8. Explain the concept of defined contribution cross-testing and how the general test works on a cross-tested basis. 9. Calculate the gateway test to determine whether the test is satisfied in a crosstested defined contribution plan. 10. Describe the benefits, rights and features provided under a plan, and understand the current and effective availability test. E. ADP/ACP Testing 1. Explain the special nondiscrimination tests (ADP/ACP) applicable to 401(k) plan contributions. 2. Calculate an average deferral ratio and the ADP or an average contribution ratio and the ACP. 3. Identify contributions that are included in the ADP or ACP test. 4. Distinguish between the prior-year and current-year testing methods. 5. Define qualified nonelective contributions and when they can be used to correct a testing failure. 6. Identify correction methods that can be used to cure failed ADP/ACP tests. 7. Calculate the corrective distribution amounts in a failed ADP/ACP test. 8. Describe the tax treatment of different correction methods. 9. Compute the excise tax on excess contributions and excess aggregate contributions. F. Top-Heavy Testing 1. Define a key employee and former key employee. 2. Determine whether a plan is top-heavy. 3. Describe the permissive and required aggregation of plans for purposes of the top-heavy determination. 4. Identify the consequences of being a top-heavy defined contribution plan. 5. Identify the consequences of a being a top-heavy defined benefit plan. G. Related Employers 1. Identify the factors that are relevant in determining whether an employer is part of a controlled group or an affiliated service group. 2. Explain the consequences of a controlled group or affiliated service group relationship. 3. Explain the application of the qualification rules to multiple employer plans. ERPA-SEE Syllabus Page 3 of 8

4 H. Elective Deferral Arrangements 1. Explain traditional 401(k) safe harbor plans and how the testing exemptions work. 2. Identify the requirements of a qualified automatic contribution arrangement safe harbor 401(k) plan. 3. Describe a 401(m) safe harbor arrangement. 4. Describe the safe harbor notice requirements. 5. Identify the requirements of a SIMPLE 401(k) plan. 6. Explain the advantages of adopting an automatic enrollment plan. 7. Define Roth 401(k) contribution requirements. I. Deduction and Funding Rules 1. Explain the application of the deduction rules to both defined benefit and defined contribution plans. 2. Calculate the maximum deduction limit applicable to a defined contribution plan. 3. Calculate the maximum deductible contribution when a plan sponsor maintains both a defined contribution and defined benefit plan. 4. Define the contribution and compensation components used in determining the deduction limit. 5. Calculate the earned income for a self-employed individual or partner in a partnership. 6. Identify the excise tax on nondeductible contributions to qualified plans and on failure to meet minimum funding requirements. 7. Explain general concepts of minimum funding. J. Miscellaneous Plans 1. Describe the characteristics of an IRC 403(b) arrangement. 2. Describe the operational requirements of a 403(b) arrangement. 3. Identify the characteristics of a fully insured plan under IRC 412(i). 4. Identify the characteristics of IRA funded employer sponsored arrangements. K. Legal Framework 1. Compare and contrast the jurisdiction of DOL/IRS/PBGC. 2. Identify which plans are covered under ERISA Titles I and IV. 3. Explain the reliance permitted on different levels of government guidance (i.e., regulations, revenue procedures, private letter rulings, etc.). ERPA-SEE Syllabus Page 4 of 8

5 Internal Revenue Service Enrolled Retirement Plan Agent Special Enrollment Examination (ERPA-SEE) Syllabus Part II: Plan Documents, Reporting and Distribution Issues I. General Description The syllabus for Part II of the ERPA-SEE outlines issues affecting qualified plans not addressed in Part I. This includes plan documents and governmental filings, rollovers and distributions, consent issues and participant loans. Topics also cover a practitioner s interaction with the IRS though plan audits and correction programs. The test also includes questions on ethics and professional responsibility issues. II. Learning Objectives L. Plan Documents and Amendments 1. Identify who can sponsor and adopt a qualified plan. 2. Distinguish between the trust agreement, the plan document and an adoption agreement. 3. Identify the different types of plan documents. 4. Identify the limitations on changes that would be allowed to be made to preapproved plans. 5. Describe the reliance rules on advisory, opinion and determination letters. 6. Describe the role of a sponsoring prototype organization. 7. Distinguish between the role of the plan trustee and plan administrator. 8. Differentiate between required and discretionary amendments and their timing, including remedial amendment periods. 9. Distinguish when plan amendments can and cannot be made retroactively. 10. Identify protected benefits that cannot be eliminated/changed by means of plan amendment. 11. Describe the remedial amendment cycle. M. Government Filings and Submissions 1. Describe Form 2848 and who may represent the client before the IRS in retirement plan matters. 2. Explain the procedure to submit a plan to the IRS for qualification review. ERPA-SEE Syllabus Page 5 of 8

6 3. Explain the use of Forms 5300, 5307 and Identify who is required to file Form 5500 series and the due dates. 5. Based on a set of facts identify which schedules are required to be submitted in the Form 5500 series. 6. Explain Form 5500 series filing requirements for final plan year, amended returns and short plan years. 7. Determine penalties for failure to report or late filing for Form 5500 series and understand the DOL Delinquent Filers Voluntary Compliance program (DFVC). 8. Identify the audit report requirements for Form 5500 series. N. Participant Communications 1. Define Summary Plan Description requirements and timing. 2. Identify required notices to employees on plan submission and plan termination. 3. Define Summary of Material Modifications requirements and timing. 4. Define annual notices to participant, including the Summary Annual Report and PPA-required funding notice for defined benefit plans. 5. Determine how often benefit statements must be given to participants and the content of such statements, including the changes required under PPA. 6. Understand the requirements for distribution and rollover notices, including the IRC 402(f) Special Tax Notice and the timing of payouts. 7. Identify and contrast acceptable methods of delivering employee communications. O. Rollovers 1. Explain the general rules governing eligible rollovers to and from qualified plans, including the PPA-allowed Roth IRA rollovers. 2. Identify the criteria used to determine eligibility for rollover. 3. Explain the distinction between direct rollovers and plan-to-plan transfers, including the PPA changes to the non spouse beneficiary rollover rules. 4. Describe the sixty-day rule as it applies to distributions and rollovers. 5. Explain the options relating to automatic IRA rollover. P. Distributions 1. Determine the general tax consequences of qualified plan distributions. 2. Identify the rules on distributions subject to withholding. 3. Summarize the rules, penalties and exceptions that apply to premature distributions. 4. List the categories of nontaxable distributions. ERPA-SEE Syllabus Page 6 of 8

7 5. Describe the tax treatment of employer securities distributed in kind. 6. Outline the tax treatment of installment payments/annuities from a qualified plan. 7. Describe an involuntary cash-out and any notification requirements to plan participants. 8. Calculate a required minimum distribution amount. 9. Describe the reporting requirements for plan distributions. Q. Annuity Requirements and Spousal Consent 1. Identify plans subject to the survivor annuity requirements. 2. Explain the QPSA and QJSA requirements including the changes under PPA and how these benefits can be waived. 3. Describe the impact of the spousal consent rules on participant loans. R. Death Benefits and Beneficiaries 1. Explain the incidental death benefit rules for life insurance under a defined contribution or defined benefit plan. 2. Identify the options under the distribution rules for beneficiaries. 3. Describe the rules for nonspousal beneficiaries. S. Participant Loans 1. Define the requirements for a participant loan to satisfy IRC 72(p). 2. Explain how a loan can be a prohibited transaction under IRC Calculate the maximum available loan amount based on a participant s vested account balance. 4. Identify situations that can result in a loan default. 5. Distinguish between deemed distributions under IRC 72(p) and loan offset. T. QDROs 1. List the requirements for a domestic relations order to be considered a QDRO, including the administrative procedures for a QDRO. 2. Describe taxation of QDRO distributions. U. Plan Audit and Correction Programs 1. Describe the process of an IRS audit, including where an audit can be conducted. 2. Describe the EPCRS program, including what failures qualify, fees and typical EPCRS corrections. 3. Describe the general requirements for SCP. 4. Describe the general requirements for VCP. ERPA-SEE Syllabus Page 7 of 8

8 5. Describe the general requirements for Audit CAP. 6. Outline the differences between significant and insignificant operational failures, plan document failures and demographic failures. 7. Describe the purpose and requirements of the DOL VFC Program. V. Prohibited Transactions under IRC Identify the types of transactions which are prohibited. 2. Understand prohibited transaction exemptions, corrections and excise taxes. W. Plan Terminations 1. Outline the process to terminate a plan: IRS, DOL, PBGC required forms, documents and deadlines. 2. Identify the rules specific to a defined benefit plan termination: standard vs. distress, PBGC vs. non-pbgc, ERISA 4044 asset priority. 3. Distinguish among a frozen plan, a partial plan termination and a full termination. X. Ethics and Professional Responsibility 1. Describe the rules governing an ERPA's authority to practice before the IRS. 2. Describe the duties and restrictions applicable to an ERPA practicing before the IRS. 3. Describe the sanctions for violating regulations outlined in Circular 230. Register online at ERPA-SEE Syllabus Page 8 of 8