Question 1

For annuities that are bought with after-tax money by individuals, ordinary income taxes are paid on the return of investment earnings.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following employee benefit plans can be considered as a special form of profit sharing plans?

Accepted Answer

A)  Employee stock ownership plan
B)  Target plan
C)  Unit benefit plan
D)  Cash balance plan
E)  Keogh plans

Question 3

Under the money purchase plan, the employer:

Accepted Answer

A)  commits to contribute a certain percentage of compensation each year and guarantees a rate of return.
B)  provides certain benefits that are not explicitly defined.
C)  promises a certain amount of income replacement to the employees at retirement.
D)  allows the employees to select the employer contribution subject to certain limitations.
E)  guarantees only the annual contribution but not any returns.

Question 4

In a qualified plan, employer contributions:

Accepted Answer

A)  are significantly high compared to employee contributions.
B)  cannot be deducted as a business expense.
C)  are classified as taxable compensation to the employee.
D)  are not taxable until employees receive them as benefits.
E)  are significantly low compared to employee contributions.

Question 5

The person or entity that purchases an annuity is called:

Accepted Answer

A)  beneficiary.
B)  recipient.
C)  annuitant.
D)  owner.
E)  holder.

Question 6

An employer opts for Cliff vesting in one of their defined contribution plans under the Pension Protection Act of 2006.Here, an employee can obtain full vesting of employer contributions:

Accepted Answer

A)  after three years.
B)  at the retirement age.
C)  after two years.
D)  at the vesting age determined by the company.
E)  at the vesting age specified by ERISA.

Question 7

Clarke works in a manufacturing company as a production supervisor.He participates in the employer-sponsored retirement plan.For Clarke, the maximum amount of tax-deferred IRA contribution depends on:

Accepted Answer

A)  income earned from fixed investments alone.
B)  income earned from work alone.
C)  income earned from work and fixed investments.
D)  Income earned from work and social security.
E)  Income earned from employment and non-employment sources.

Question 8

Briefly describe the insurer options available for funding pension plans.

Accepted Answer

Following options are available for fund...

Question 9

When the compensation base is described as compensation for a recent number of years, the formula is referred to as a _____.

Accepted Answer

final aver...

Question 10

Identify a situation in which an employee will not get protection under ERISA.

Accepted Answer

A)  The employee has worked only for two years.
B)  The employee has worked only for 1200 hours.
C)  The employee has not reached twenty-one years of age.
D)  The employee was hired at the age of sixty-five.
E)  The employee is highly compensated.

Question 11

What is a simplified employee pension plan? Compare them with the regular individual retirement account.

Accepted Answer

A Simplified Employee Pension (SEP) is s...

Question 12

The normal retirement age is the age at which:

Accepted Answer

A)  employee completes twenty-five years of service.
B)  full vesting of employer contribution becomes available for employees.
C)  the employer contribution becomes equal to employee contribution.
D)  full retirement benefits become available to retirees.
E)  employee completes twenty years of service.

Question 13

An employer provides a defined benefit plan and has opted for graded vesting.Under this plan, the employees are eligible for 80 percent of employer contributions after four years.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is an example of a qualified pension plan where the contribution amount is defined but the benefit amount available at retirement varies?

Accepted Answer

A)  Traditional defined benefit plan
B)  Money purchase plan
C)  Integrated plan
D)  Cash balance plan
E)  Unit benefit plan

Question 15

Under the traditional defined benefit plan, the employer guarantees only the annual contribution but not any returns.

Accepted Answer

A) True 
 B)False

Question 16

In a deferred profit-sharing plan, the employees are given the shares of profit, based on the total experience, as a component of their monthly compensation.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is a critical difference between SEP- individual retirement accounts and other individual retirement accounts?

Accepted Answer

A)  Employee contribution is very high in SEP-IRAs.
B)  The limits of SEP-IRAs are substantially larger than other IRAs.
C)  Employee contribution is taxable in SEP-IRAs.
D)  Annual deduction limits are not applicable for SEP-IRAs.
E)  Only a narrow cross section of employees is included in the SEP.

Question 18

Differentiate between contributory and noncontributory retirement plans.

Accepted Answer

A pension plan may be contributory or no...

Question 19

Which of the following types of plans is considered to be a hybrid plan?

Accepted Answer

A)  Money purchase plan
B)  Traditional defined benefit plan
C)  Cash balance plan
D)  Profit-sharing plan
E)  Cost-sharing plan

Question 20

A(n) _____ is a qualified pension plan in which the contribution amount is defined but the benefit amount available at retirement varies.

Accepted Answer

defined co...

Exam 21: Employment-Based and Individual Longevity Risk Management

Which of the following types of plans is considered to be a hybrid plan?

Correct AnswerverifiedShow Answer

What is a simplified employee pension plan? Compare them with the regular individual retirement account.

Correct AnswerverifiedA Simplified Employee Pension (SEP) is s...View AnswerShow Answer

The normal retirement age is the age at which:

Correct AnswerverifiedShow Answer

In a qualified plan, employer contributions:

Correct AnswerverifiedShow Answer

Which of the following is an example of a qualified pension plan where the contribution amount is defined but the benefit amount available at retirement varies?

Correct AnswerverifiedShow Answer

The person or entity that purchases an annuity is called:

Correct AnswerverifiedShow Answer

When the compensation base is described as compensation for a recent number of years, the formula is referred to as a _____.

Correct Answerverifiedfinal aver...View AnswerShow Answer

Under the traditional defined benefit plan, the employer guarantees only the annual contribution but not any returns.

Correct AnswerverifiedShow Answer

Clarke works in a manufacturing company as a production supervisor.He participates in the employer-sponsored retirement plan.For Clarke, the maximum amount of tax-deferred IRA contribution depends on:

Correct AnswerverifiedShow Answer

For annuities that are bought with after-tax money by individuals, ordinary income taxes are paid on the return of investment earnings.

Correct AnswerverifiedShow Answer

Under the money purchase plan, the employer:

Correct AnswerverifiedShow Answer

An employer provides a defined benefit plan and has opted for graded vesting.Under this plan, the employees are eligible for 80 percent of employer contributions after four years.

Correct AnswerverifiedShow Answer

In a deferred profit-sharing plan, the employees are given the shares of profit, based on the total experience, as a component of their monthly compensation.

Correct AnswerverifiedShow Answer

Briefly describe the insurer options available for funding pension plans.

Correct AnswerverifiedFollowing options are available for fund...View AnswerShow Answer

Identify a situation in which an employee will not get protection under ERISA.

Correct AnswerverifiedShow Answer

A(n) _____ is a qualified pension plan in which the contribution amount is defined but the benefit amount available at retirement varies.

Correct Answerverifieddefined co...View AnswerShow Answer

Differentiate between contributory and noncontributory retirement plans.

Correct AnswerverifiedA pension plan may be contributory or no...View AnswerShow Answer

An employer opts for Cliff vesting in one of their defined contribution plans under the Pension Protection Act of 2006.Here, an employee can obtain full vesting of employer contributions:

Correct AnswerverifiedShow Answer

Which of the following is a critical difference between SEP- individual retirement accounts and other individual retirement accounts?

Correct AnswerverifiedShow Answer

Which of the following employee benefit plans can be considered as a special form of profit sharing plans?

Correct AnswerverifiedShow Answer

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A Simplified Employee Pension (SEP) is s...
View Answer

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final aver...
View Answer

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Correct Answer
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Following options are available for fund...
View Answer

Correct Answer
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Correct Answer
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defined co...
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Correct Answer
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A pension plan may be contributory or no...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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