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Exam 11: Nonqualified Deferred Compensation Plans for Executives

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Question 31

Multiple Choice

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Which one of the following is a funded plan? (Secular Trusts)

A) General asset approach
B) Secular trusts
C) Corporate life insurance
D) Rabbi trusts

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verified

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Question 32

Multiple Choice

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Nonstatutory stock options are characterize by which one of the following features? (Stock Options)

A) They qualify for favorable tax treatment
B) They are awarded at discounted prices
C) Executives do not have any ownership control over the disposition of the stock for 5 to 10 years
D) Executives pay taxes in the future when they choose to exercise their nonstatutory stock options

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Question 33

True/False

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One of the objectives of nonqualified plans is restoration.(Defining Nonqualified Deferred Compensation Plans (NQDC))

The IRC recognizes highly compensated employees and key employees but only highly compensated employees serve in executive leadership roles and participate in executive compensation and benefits plans.(Who Are Executives?)

Secular trusts are subject to a company's creditors in the event of bankruptcy or insolvency.(Secular Trusts)

Constructive receipt guides the timing of an executive's obligation to pay income taxes for funded nonqualified plans.(Funding Mechanisms)

Which of the following is not a feature of excess benefits plans? (Excess Benefit Plans)

An employee in a high policymaking role manages the overall company and directs the work of two or more people.(Mandatory Retirement Age)

ERISA Title I specifies minimum standards for participation and vesting protections for participants and beneficiaries.(ERISA Qualification Criteria)

Funding mechanisms provide the financial resources only for funded plans.(Funding Mechanisms)

A stock option is a company's offering of stock to an employee.(Basic Terminology)

For funded plans,executives generally pay federal income taxes when they begin to receive payments from these plans.(Funding Mechanisms)

Which of the following is not one of the objectives of SERP? (Supplemental Executive Retirement Plans (SERPs) )

Which one of the following is not true about stock appreciation rights? (Stock Appreciation Rights)

Which of the following ERISA Title I parts does not apply to nonqualified plans? (Supplemental Executive Retirement Plans (SERPs) )

The Securities Exchange Act of 1934 is also commonly referred to as the Dodd-Frank Act.(Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act))

Top hat plans are exempt from which ERISA Title I regulation? (Supplemental Executive Retirement Plans (SERPs) )

Which one of the following is not a feature of corporate owned life insurance? (Corporate-Owned Life Insurance)

The Securities Exchange Act of 1934 requires disclosure of company financial information and information about executive compensation practices; all companies must comply.(Securities Exchange Act of 1934)

The IRS has no impact on nonqualified plans.(Defining Nonqualified Deferred Compensation Plans (NQDC))