Qualified Retirement Plans • Types of Plans • Participation • Contributions • Benefits • Distributions • Plan Administration
Chapter 1 covers the fundamentals of qualified retirement plans. Qualified plans fall into two main categories: defined contribution (contribution rate is fixed; benefit varies) and defined benefit (benefit is fixed; employer contributions are actuarially determined). The 2026 annual additions limit for defined contribution plans is $72,000; the defined benefit annual benefit limit is $290,000; the compensation cap is $360,000.
Plans must meet nondiscrimination standards (ratio test or average benefits test, plus the 50/40 test). A plan is top-heavy when key employee accounts exceed 60% of total assets. Under SECURE Act 2.0, RMDs begin at age 73 (75 for those born after 1959). The missed-RMD excise tax is 25% of the shortfall (10% if corrected within two years). Vesting schedules: 5-year cliff or 3-to-7-year graded (accelerated to 3-year cliff or 2-to-6-year graded for top-heavy plans).