front 1 Which of the following statements about the tax implications of qualified pension plans is true?
| back 1 Answer: B |
front 2 Beta Corporation has 1,000 employees eligible to participate in the firm's pension plan, and 100 of these employees are considered highly compensated. All of the highly compensated employees are covered by the plan. What is the minimum number of the 900 non-highly compensated employees who must be covered by the plan in order for the plan to satisfy the ratio percentage test?
| back 2 Answer: B |
front 3 What are the minimum age and service requirements that can be imposed on employees eligible to participate in a retirement plan?
| back 3 Answer: B |
front 4 Which of the following statements about retirement ages in defined benefit pension plans is (are) true?
| back 4 Answer: A |
front 5 Which of the following statements concerning defined-benefit pension plans is (are) true?
| back 5 Answer: A |
front 6 Which of the following statements concerning defined contribution pension plans is (are) true?
| back 6 Answer: C |
front 7 All of the following are potential disadvantages to employees covered by a money-purchase pension plan EXCEPT
| back 7 Answer: A |
front 8 Which of the following statements about retirement benefits under pension plans is true?
| back 8 Answer: C |
front 9 Under a unit-benefit formula, benefits are a function of both
| back 9 Answer: A |
front 10 Vesting refers to
| back 10 Answer: C |
front 11 Which of the following statements about the minimum vesting standards for a qualified defined benefit plan is (are) true?
| back 11 Answer: B |
front 12 Which of the following statements about the protection provided by the Pension Benefit Guaranty Corporation is (are) true?
| back 12 Answer: A |
front 13 Which of the following distributions from a qualified retirement plan would be exempt from the 10 percent penalty tax if the distribution occurred before the covered employee was age 59.5?
| back 13 Answer: C |
front 14 As Social Security slants benefits in favor of lower-paid workers, the Internal Revenue Code permits employers to adjust pension contributions so that the overall contributions (pension plus Social Security) are nondiscriminatory. This adjustment permits employers to increase pension contributions for highly-compensated employees. Adjusting contributions to consider Social Security contributions is called
| back 14 Answer: D |
front 15 For a long-term employee who is covered by a defined benefit plan, the highest retirement income will be obtained if his/her retirement income is based on
| back 15 Answer: D |
front 16 A financial institution that provides for the accumulation or administration of the funds that will be used to pay pension benefits is called a
| back 16 Answer: D |
front 17 Which of the following statements about pension funding agencies and funding instruments is true?
| back 17 Answer: B |
front 18 Which of the following statements about trust fund plans is (are) true?
| back 18 Answer: D |
front 19 Which of the following statements about Section 401(k) plans is true?
| back 19 Answer: A |
front 20 Which of the following statements about withdrawals from Section 401(k) plans is (are) true?
| back 20 Answer: B |
front 21 Which of the following statements concerning retirement plans for the self-employed is true?
| back 21 Answer: B |
front 22 Which of the following statements about SIMPLE retirement plans is true?
| back 22 Answer: A |
front 23 Which of the following statements is (are) true with respect to SIMPLE retirement plans?
| back 23 Answer: B |
front 24 Rita went to work for a manufacturing company. The company offers a defined-benefit pension plan. The retirement benefit is equal to 1.5 percent multiplied by years of service with the company, and the result is multiplied by average salary in the three highest consecutive years of paid employment with the company. The benefit formula used at Rita's company is a
| back 24 Answer: D |
front 25 Which of the following statements is (are) true with respect to vesting under a qualified retirement plan?
| back 25 Answer: C |
front 26 Early distributions from qualified retirement plans are assessed a 10 percent penalty. However, there are some exceptions to this rule. All of the following distributions are exempt from the penalty tax EXCEPT
| back 26 Answer: B |
front 27 ACME Company is considering starting a retirement plan for its employees. One option ACME is considering is a profit-sharing plan. All of the following are advantages of this type of retirement plan EXCEPT
| back 27 Answer: C |
front 28 ABC Company offers a qualified retirement plan. ABC selected a funding instrument with an insurer in which the insurer promised to pay a specified interest rate for a number of years on a lump sum deposit. This funding instrument is called a
| back 28 Answer: D |
front 29 RST Company offers a qualified retirement plan. Each employee contributes 4 percent of his or her pretax income to the plan, and RST matches the employee's contribution. An employee's benefit at retirement is determined by his or her account balance at the time of retirement. What type of retirement plan does RST offer?
| back 29 Answer: D |
front 30 Which of the following statements is true with regard to defined benefit and defined contribution pension plans?
| back 30 Answer: D |
front 31 JKL Company just converted its traditional defined-benefit plan to another type of plan. Under the plan, benefits are defined in terms of a hypothetical account balance, with retirement benefits dependent upon the value of the participant's account at retirement. Each year, employees receive an interest rate credit and a pay credit which is a specified percentage of compensation. This type of plan is called a
| back 31 Answer: C |
front 32 All the following statements concerning a Roth 401(k) plan are true EXCEPT
| back 32 Answer: D |
front 33 Special vesting rules apply to qualified defined contribution plans with voluntary employee contributions and matching employer contributions. Which of the following statements is (are) true with respect to these vesting rules?
| back 33 Answer: B |
front 34 Small business owners have a number of retirement plans available to them. One type of plan is limited to employers with 100 or fewer eligible employees. Under this type of plan, small employers are exempt from most of the nondiscrimination and administrative rules that apply to qualified plans. Such plans are called
| back 34 Answer: B |
front 35 Which of the following statements is (are) true with respect to profit-sharing plans?
| back 35 Answer: B |
front 36 Lynn works for a state university. In addition to the university’s regular retirement plan, Lynn participates in another retirement savings plan. She elected to have $5,000 of her salary withheld and contributed to a tax-sheltered annuity with an insurer. The type of plan that Lynn established is called a
| back 36 Answer: B |
front 37 All of the following statements about 403(b) plans are true EXCEPT
| back 37 Answer: D |
front 38 Which of the following statements is (are) true regarding cash-balance pension plans?
| back 38 Answer: D |
front 39 Which of the following statements concerning defined benefit and defined contribution pension plans is (are) true?
| back 39 Answer: B |
front 40 Under a 401(k) plan, what is compared to determine if the plan unfairly discriminates in favor of highly compensated employees?
| back 40 Answer: C |
front 41 Under one type of retirement plan for small businesses, the employer contributes to an IRA established for each eligible employee. Under this type of plan, the contribution limits are significantly higher than they are for traditional IRAs and Roth IRAs. This type of plan, which requires little paperwork, is called a
| back 41 Answer: A |
front 42 In the context of employee benefits, the term "discrimination" refers to benefit comparisons between
| back 42 Answer: C |
front 43 Which of the following statements regarding minimum vesting standards for qualified defined benefit plans is (are) true?
| back 43 Answer: B |
front 44 Which of the following statements about tax-deferred retirement plans in the U.S. is true?
| back 44 Answer: A |
front 45 Which of the following is a common investment mistake that many retirement plan participants make?
| back 45 Answer: B |
front 46 Winslow Corporation has many long-term employees. The company has never had a pension plan. Recently, a new management team was hired. The new president said he would like to start a pension plan through which he could reward the long-term service provided by many employees. Which of the following types of plans should Winslow Corporation adopt?
| back 46 Answer: D |
front 47 Which of the following statements about Roth 401(k) plans is true?
| back 47 Answer: B |
front 48 To encourage low- to moderate-income workers to save for retirement, a tax credit called the Saver’s Credit is available. Which statement about tax credits and tax deductions is true?
| back 48 Answer: B |
front 49 The tax credit available through the Saver’s Credit is equal to
| back 49 Answer: C |
front 50 Which statement is true with regard to problems and issues with tax-deferred retirement plans in the United States?
| back 50 Answer: A |