ASPPA QKC Qualified 401(k) Consultant

Under IRC §414(n), a leased employee must generally be treated as the recipient employer's employee for qualified plan purposes once which condition is satisfied?

• AThe individual has performed services on a substantially full-time basis for at least one…
• BThe individual has been on assignment for at least six months regardless of hours
• CThe leasing organization sponsors no retirement plan of its own
• DThe recipient pays the leasing organization more than $5,000 annually for the services

A leased employee is excluded from the recipient employer's plan if the leasing organization maintains a safe-harbor plan under IRC §414(n)(5). Which feature is required of that safe-harbor plan?

• AA money purchase pension plan with a 10% non-integrated contribution, immediate participa…
• BA 401(k) plan with at least 3% safe-harbor nonelective contributions
• CA defined benefit plan providing at least a 2% accrual rate per year of service
• DA SEP allowing each leased employee to contribute up to the §402(g) limit

When a worker meets the leased-employee definition, on whose payroll is the worker reflected for FICA and federal income tax withholding purposes?

• AThe leasing organization remains the common-law employer for payroll and withholding even…
• BThe recipient immediately becomes the payroll employer once the one-year threshold is met
• CBoth the recipient and the leasing organization must split payroll reporting on a 50/50 b…
• DPayroll reporting transfers to whichever entity pays the higher hourly rate

Which of the following workers is NOT counted toward the recipient's leased-employee group under §414(n)?

• AAn independent contractor who fails the common-law-employee test and does not meet the §4…
• BA clerical worker leased through a staffing firm for 16 months at 40 hours per week under…
• CAn IT engineer placed by a leasing firm for 14 months performing core recipient work unde…
• DA project manager assigned for 13 months at 35+ hours per week under recipient supervision

For purposes of the §414(n)(5) safe-harbor 20% test, leased employees may not exceed 20% of which population?

• AThe recipient's nonhighly compensated workforce
• BThe recipient's total workforce including HCEs
• CThe leasing organization's total client roster
• DPlan participants benefiting under the recipient's qualified plan

A plan sponsor wants to exclude all leased employees from its 401(k). Under §410(b), this exclusion is treated as which type of classification?

• AA statutory exclusion that still requires the plan to satisfy the ratio percentage or ave…
• BAn automatic safe harbor that never triggers coverage testing
• CA reasonable classification only if approved by the IRS in a determination letter
• DAn invalid exclusion that disqualifies the plan

Two recipient employers share a single leased employee. How is that employee credited for purposes of §414(n) at each recipient?

• AEach recipient counts the hours actually performed for that recipient when determining su…
• BThe first recipient to engage the worker counts all hours; subsequent recipients ignore t…
• CBoth recipients must each treat the worker as a full leased employee regardless of hours…
• DOnly the leasing organization tracks aggregate hours; recipients ignore the worker

Which of the following is a permissible source from which a sole proprietor's earned income is determined for qualified plan purposes?

• ANet earnings from self-employment under §1402(a) reduced by the deductible portion of sel…
• BGross Schedule C revenue before any business deductions
• CW-2 Box 1 wages issued to the sole proprietor from the business
• DSchedule C net profit before deducting half of self-employment tax but reduced by the ent…

A partnership maintains a 401(k) plan. A general partner's plan compensation is calculated based on which figure?

• AThe partner's earned income computed from K-1 self-employment earnings, reduced by ½ SE t…
• BThe partner's draw amounts received during the plan year
• CThe partner's W-2 wages (partners receive guaranteed-payment W-2s)
• DThe partner's share of partnership gross receipts

An owner of an S corporation receives both W-2 wages and pass-through K-1 income. Which amount is plan compensation under §415?

• AOnly the W-2 wages (Box 1 or Box 5, per plan definition); K-1 distributions are not compe…
• BThe combined total of W-2 wages and K-1 pass-through income
• COnly K-1 pass-through earnings
• DW-2 wages plus shareholder distributions in excess of basis

A tax-exempt employer described in IRC §501(c)(3) may sponsor which of the following retirement vehicles?

• ABoth a 401(k) plan and a 403(b) plan, subject to a combined §402(g) limit for the employee
• BOnly a 401(k) plan; 403(b) is reserved for governmental employers
• COnly a 403(b) plan; 501(c)(3) employers are prohibited from sponsoring 401(k) plans
• DOnly a SEP-IRA; qualified plans are unavailable to tax-exempt entities

A church plan that has NOT made a §410(d) election is generally exempt from which set of rules?

• AMost ERISA Title I rules (participation, vesting, funding, fiduciary), PBGC coverage, and…
• BOnly PBGC premiums; ERISA rules still apply
• COnly IRC §415 limits; all other rules apply
• DOnly nondiscrimination testing; ERISA fully applies

A governmental 401(a) plan sponsored by a state or local government is generally NOT subject to which requirement?

• AERISA Title I and the §401(a)(4) nondiscrimination rules (governmental plans are exempted…
• BIRC §415 contribution limits
• CPlan documentation requirements under §401(a)
• DAnnual reporting on Form 5500

A is owned 90% by Parent. Parent owns 95% of B. Which controlled-group relationship exists?

• AParent-subsidiary controlled group consisting of Parent, A, and B (Parent owns ≥80% of ea…
• BBrother-sister controlled group consisting of A and B only
• CNo controlled group because Parent must own 100%
• DCombined controlled group requiring a separate 50% common-ownership test

Five individuals own the following corporations. Which combination establishes a brother-sister controlled group under §1563(a)(2)?

• ACommon ownership of more than 50% by the same 5 or fewer individuals taking each owner's…
• BCommon ownership of more than 50% by the same 10 individuals
• CAny common ownership by more than one individual across two corporations
• DCombined ownership of at least 100% by the same individuals

Which entities are subject to controlled-group attribution rules under §1563(e)?

• AAttribution applies from spouses, minor children, grandparents, parents, and trusts, with…
• BAttribution only applies between spouses
• CAttribution applies only among siblings, never lineal descendants
• DAttribution applies only between unrelated business associates

An affiliated service group (ASG) under IRC §414(m) typically requires which structure?

• AAn A-Org or B-Org service organization with a first service organization (FSO) plus owner…
• BCommon ownership of 80% or more between two corporations only
• CSame-state operations by two professional service providers
• DA franchisor/franchisee relationship

Which is a consequence of being part of a controlled group or ASG under §414?

• AAll members are treated as a single employer for coverage (§410(b)), nondiscrimination (§…
• BEach member files an independent Form 5500 and is tested separately
• CAggregation applies only to §415 limits, not coverage or nondiscrimination
• DAggregation is voluntary at the sponsor's election

A medical practice (FSO) is partly owned by a separately incorporated billing company, which regularly performs services for the FSO. This is an example of which ASG type?

• AAn A-Org affiliated service group
• BA B-Org affiliated service group
• CA management-function group only
• DA controlled group, not an ASG

Corp X owns 100% of Corp Y, which owns 80% of Corp Z. Corp X owns 5% of Corp Z directly. Is Corp Z part of the parent-subsidiary controlled group with X?

• AYes, because Y owns 80% of Z, and Y is wholly owned by X, the entire chain forms a single…
• BNo, because X must own 80% of Z directly
• CNo, because the chain ownership must be exactly 100% at each level
• DYes, but only if X, Y, and Z file a single consolidated tax return

Which of the following does the IRS recognize as a separate line of business (QSLOB) under §414(r)?

• AA line of business that has at least 50 employees, files a §414(r) notice with the IRS, a…
• BAny department within a single employer that the sponsor designates as separate
• CAny product line that contributed more than 10% of revenue last year
• DAny geographic region with more than 10 employees

Two unrelated companies, A and B, jointly own a 50/50 management company (MgmtCo) that performs all top-level management for A and B. Does §414(m)(5) treat MgmtCo as part of an ASG?

• AYes — under the management-function ASG rules, MgmtCo and its principal-client employer(s…
• BNo, because management companies are always separate employers
• CYes, but only if MgmtCo is wholly owned by A or B
• DNo, unless A and B are also a controlled group

Employees of a controlled-group member who are not eligible to participate in the plan still affect coverage testing how?

• AThey are counted in the §410(b) denominator as nonbenefiting employees, which can lower t…
• BThey are ignored entirely if they work for a different member
• CThey are counted only if they earn more than the §414(q) HCE threshold
• DThey are counted only when the plan elects an aggregation under §410(b)(6)

After a stock acquisition, §410(b)(6)(C) provides a transition period under which coverage testing is treated as satisfied if which condition is met?

• ACoverage was met immediately before the transaction, no significant changes are made to t…
• BCoverage testing is permanently waived for the acquired group
• CThe acquired employees must be excluded from the plan during the transition
• DThe buyer must file a new determination letter within 90 days

An employer maintains separate plans for two divisions. Both plans cover only their respective division. To avoid running coverage separately on each, the employer may permissively aggregate the plans under §410(b)(6)(B) provided which condition is met?

• ABoth plans have the same plan year and same benefit/contribution formula and are tested t…
• BEach plan covers fewer than 50 employees
• CBoth plans use the same trustee
• DThe plans use different vesting schedules

Two corporations are owned 60/40 by Spouse A and Spouse B respectively. Neither spouse has direct involvement in the other's company and there is no community-property income from the other entity. Under §1563(e)(5), what is the controlled-group result?

• AThe spousal noninvolvement exception applies, so the entities are NOT a brother-sister co…
• BAutomatic brother-sister controlled group because of marriage
• CBrother-sister exists if both spouses' combined ownership reaches 80%
• DSpousal attribution is irrelevant; controlled-group rules ignore family relationships

Plan compensation for §415 purposes generally must reflect compensation paid through which date relative to the limitation year?

• ACompensation actually paid within the limitation year, including amounts paid within 2½ m…
• BOnly amounts paid before the date of severance
• CCompensation accrued but not yet paid during the limitation year
• DCompensation paid through the §401(a)(9) required beginning date

Which of the following is automatically EXCLUDED from §415 compensation under the regulations?

• ASeverance pay (other than regular post-severance pay paid within the post-severance windo…
• BOvertime wages
• CCommissions paid during the year
• DBonuses paid for services performed during the year

Under §414(s), which compensation definition can be used to satisfy nondiscrimination testing without separately demonstrating the definition is nondiscriminatory?

• AAny of the three safe-harbor definitions: §415 compensation, W-2 wages (Box 1), or §3401(…
• BOnly base salary, excluding any overtime or bonuses
• COnly compensation paid to non-HCEs
• DOnly a custom definition approved by the IRS

An employer's plan defines compensation as W-2 wages excluding bonuses. To use this definition for ADP testing, what additional step is required?

• ARun the §414(s) nondiscriminatory compensation test to confirm the average HCE compensati…
• BNothing — any reasonable definition is automatically a §414(s) safe harbor
• CReceive an IRS private letter ruling approving the definition
• DLimit the bonus exclusion to NHCEs only

For 2026, the IRC §401(a)(17) compensation limit (the maximum compensation that may be considered for plan purposes) is approximately:

• A$360,000
• B$345,000
• C$330,000
• D$280,000

A plan operates on a calendar year. Mid-year (July 1), it amends to exclude commissions from compensation. For the full year, plan compensation:

• AMust reflect commissions paid through June 30 plus exclude commissions paid from July 1 f…
• BMust apply the new definition retroactively to January 1
• CMay ignore the mid-year amendment until the next plan year
• DMust be the most favorable of the old and new definitions for each employee

A non-safe-harbor 401(k) plan must satisfy coverage under §410(b) using either the ratio percentage test or the average benefits test. The ratio percentage test requires:

• APlan's NHCE coverage percentage divided by the plan's HCE coverage percentage must equal…
• BAt least 70% of NHCEs must benefit, regardless of HCE coverage
• CPlan's HCE coverage divided by NHCE coverage must be at least 70%
• DAll employees must be eligible to participate

The average benefits test (ABT) under §410(b) has two parts. What are they?

• A(1) The nondiscriminatory classification test (reasonable classification + ratio passing…
• B(1) ADP test and (2) ACP test
• C(1) Top-heavy ratio and (2) §415 limit
• D(1) Coverage by classification and (2) age-weighted contribution comparison

Under the average benefit percentage test, which plans must be aggregated in computing each employee's benefit percentage?

• AAll qualified plans of the employer, including both defined contribution and defined bene…
• BOnly the plan being tested
• COnly defined contribution plans of the employer
• DOnly plans of the controlled-group member that sponsors the tested plan

Treas. Reg. §1.410(b)-4 establishes safe and unsafe harbor percentages that depend on the plan's:

• ANHCE concentration percentage (the percentage of all nonexcludable employees who are NHCE…
• BTotal participant count
• CAverage HCE compensation
• DPlan asset balance

For the nondiscriminatory classification component of the ABT, which is NOT considered a 'reasonable classification'?

• AClassification of employees by name or Social Security number
• BSalaried vs. hourly employees
• CJob category or division
• DDate of hire ranges or geographic location

Excluded employees under §410(b)(4) — such as employees under age 21 or with less than one year of service — are treated how in the coverage test?

• AThey are excluded from both the numerator and denominator of the ratio percentage test (t…
• BCounted only in the denominator
• CCounted only in the numerator
• DCounted in the test like any other employee

A plan with 30% NHCE coverage and 60% HCE coverage has what ratio percentage?

• A50%
• B30%
• C60%
• D90%

Under §410(b)(6)(F), what is the result if a plan covers ONLY HCEs?

• AThe plan automatically fails §410(b) because the ratio percentage is 0% and ABT cannot sa…
• BThe plan automatically passes because zero NHCEs are excluded
• CThe plan passes if at least one HCE is covered
• DThe plan must demonstrate it covers at least one NHCE within 90 days

A plan applies a permitted disparity (integration) formula. The maximum integration level for a DC plan in 2026 is generally:

• AThe Social Security taxable wage base ($176,100 for 2025; updated annually) or a lower le…
• B$50,000 per participant
• C100% of compensation
• D20% of the §401(a)(17) compensation limit

A new comparability (cross-tested) profit sharing plan tests nondiscrimination under §401(a)(4) using accrual rates. To use cross-testing for a DC plan, the plan must satisfy which gateway?

• AThe minimum allocation gateway: each NHCE receives a contribution at least equal to one-t…
• BEach NHCE receives at least 3% of compensation
• CAll HCEs receive the same allocation
• DThe plan covers at least 50 NHCEs

The ADP test for a non-safe-harbor 401(k) plan limits the average HCE deferral rate to:

• AThe greater of 125% of NHCE ADP, or NHCE ADP + 2 percentage points (capped at 2× NHCE ADP)
• BAlways equal to NHCE ADP
• CNHCE ADP + 5 percentage points
• D150% of NHCE ADP

A 401(k) plan can avoid ADP/ACP testing by being a §401(k)(12) traditional safe harbor. The contribution requirement is:

• AEither (1) a nonelective contribution of 3% of compensation to all eligible NHCEs, or (2)…
• BA nonelective of 5% of compensation
• CA match of 50% on the first 6% deferred only
• DA discretionary match decided after year-end

A QACA (Qualified Automatic Contribution Arrangement) under §401(k)(13) has all of the following features EXCEPT:

• AThe same 100% immediate vesting required of traditional safe-harbor employer contributions
• BAn auto-enroll default rate starting at 3% and stepping up at least 1% per year to a mini…
• CA safe-harbor match of 100% on the first 1% plus 50% on the next 5%, OR a 3% nonelective…
• DA 2-year vesting requirement for the employer safe-harbor contributions

Under SECURE 2.0 §101, new 401(k) and 403(b) plans established after December 29, 2022 must include automatic enrollment for plan years beginning after December 31, 2024, with a default deferral rate of:

• ABetween 3% and 10%, escalating 1% annually to at least 10% (and no more than 15%) of comp…
• BExactly 6% with no escalation requirement
• CAt least 8% with no maximum
• DOptional auto-enrollment with no specific default rate

ADP test failure can be corrected within 12 months after the plan year-end by which method?

• ARefund of excess contributions to HCEs (with allocable earnings), or QNEC/QMAC contributi…
• BForfeiture of HCE deferrals (deferrals cannot be forfeited)
• CReduction of NHCE deferrals retroactively
• DApplication of the §404(a) deduction limit