Question 1

Match the descriptions with their terms:
-The _________________ generally is stated in a pension plan and represents the earliest age at which the employee can retire and receive full pension benefits.

Accepted Answer

A)   401(k)  plan
B)   Allocated plans
C)   defined benefit plan
D)   defined contribution plan
E)   Keogh plansF)  lump-sum distribution optionG)  Mandatory retirement ageH)  normal retirement ageI)  Permitted disparityJ)  Qualified plansK)  rolloverL)  Section 403(b)  plansM)  Unallocated plans

Question 2

Defined contribution plans use a specified formula to determine the exact amount of the employer's contributions.

Accepted Answer

A) True 
 B)False

Question 3

Kelly, a 39 year old earning $200,000 per year working for a pension consulting firm, would like to contribute the maximum tax deductible amount to her IRA. She is married to Tim, who is completely disabled and has not earned any income this year. Assuming that she is not participating in an employer sponsored plan (although her employer offers a contributory pension plan) , Kelly should contribute

Accepted Answer

A)   $0, because she earns more than $50,000,
B)   $0, because her employer offers a qualified retirement plan,
C)   $3,000,
D)   $6,000.

Question 4

Match the descriptions with their terms:
-_________________ require that a record be kept of the account of each employee and that each dollar an employer contributes is associated with a particular employee.

Accepted Answer

A)   401(k)  plan
B)   Allocated plans
C)   defined benefit plan
D)   defined contribution plan
E)   Keogh plansF)  lump-sum distribution optionG)  Mandatory retirement ageH)  normal retirement ageI)  Permitted disparityJ)  Qualified plansK)  rolloverL)  Section 403(b)  plansM)  Unallocated plans

Question 5

Match the descriptions with their terms:
-A/An _________________ uses a formula to compute the monthly benefit payable at retirement.

Accepted Answer

A)   401(k)  plan
B)   Allocated plans
C)   defined benefit plan
D)   defined contribution plan
E)   Keogh plansF)  lump-sum distribution optionG)  Mandatory retirement ageH)  normal retirement ageI)  Permitted disparityJ)  Qualified plansK)  rolloverL)  Section 403(b)  plansM)  Unallocated plans

Question 6

Which of the following statements is true regarding pension plan vesting?

Accepted Answer

A)   Vesting provisions apply to employee contributions,
B)   The most common form of vesting provision contains a graded vesting schedule whereby the percentage of vesting rises with each year of employee participation,
C)   The most common form of vesting provision involves an employee becoming fully vested after five years,
D)   Before becoming vested, employees who terminate their employment will forfeit their pension rights to the extent that they have not been funded by the employer.

Question 7

Pensions are usually paid out in the form of an annuity.

Accepted Answer

A) True 
 B)False

Question 8

Contributory plans involve

Accepted Answer

A)   a requirement that employees contribute a part of the cost of the plan,
B)   a formula that specifically defines the amount that an employer must contribute,
C)   less paperwork than noncontributory plans because defined benefit plans involve more actuarial projections,
D)   only retirement related plans and never other forms of employee benefits.

Question 9

Employees are not allowed to deduct contributions to contributory qualified pension plans.

Accepted Answer

A) True 
 B)False

Question 10

A Section 403(b) plan is a viable option for providing retirement benefits for most commercial businesses.

Accepted Answer

A) True 
 B)False

Question 11

The normal retirement age reflects the earliest age at which employees can retire and receive full pension benefits.

Accepted Answer

A) True 
 B)False

Question 12

Match the descriptions with their terms:
-_________________ are retirement savings plans that are designed for use by those who have self-employment income.

Accepted Answer

A)   401(k)  plan
B)   Allocated plans
C)   defined benefit plan
D)   defined contribution plan
E)   Keogh plansF)  lump-sum distribution optionG)  Mandatory retirement ageH)  normal retirement ageI)  Permitted disparityJ)  Qualified plansK)  rolloverL)  Section 403(b)  plansM)  Unallocated plans

Question 13

Match the descriptions with their terms:
-By exercising a/an _________________, employees can gain some investment flexibility, but they typically will lose the lifetime income guarantee associated with the annuity option.

Accepted Answer

A)   401(k)  plan
B)   Allocated plans
C)   defined benefit plan
D)   defined contribution plan
E)   Keogh plansF)  lump-sum distribution optionG)  Mandatory retirement ageH)  normal retirement ageI)  Permitted disparityJ)  Qualified plansK)  rolloverL)  Section 403(b)  plansM)  Unallocated plans

Question 14

Lump-sum distributions from employer sponsored pension plans may not be rolled over into individual retirement accounts unless the employee has paid federal income tax on the entire amount of the distribution.

Accepted Answer

A) True 
 B)False

Question 15

Match the descriptions with their terms:
-An IRA _________________ involves placing assets formerly held in an IRA or in an employer sponsored retirement plan into a new IRA.

Accepted Answer

A)   401(k)  plan
B)   Allocated plans
C)   defined benefit plan
D)   defined contribution plan
E)   Keogh plansF)  lump-sum distribution optionG)  Mandatory retirement ageH)  normal retirement ageI)  Permitted disparityJ)  Qualified plansK)  rolloverL)  Section 403(b)  plansM)  Unallocated plans

Question 16

Which of the following is not a tax benefit associated with a qualified pension plan?

Accepted Answer

A)   deductibility of employer contributions in the year made,
B)   deferral or avoidance of taxes on employer contributions,
C)   deferral of taxation on investment earnings within the pension fund,
D)   deductibility of employee contributions in the year made if the plan is contributory.

Question 17

Permitted disparity allows a certain degree of discrimination in favor of highly-compensated employees.

Accepted Answer

A) True 
 B)False

Question 18

A SIMPLE 401(k) plan is always more attractive than a regular 401(k) plan.

Accepted Answer

A) True 
 B)False

Question 19

The ability of employers to take an income tax deduction for contributions to a retirement plan is important for all of the following types of plans except:

Accepted Answer

A)   defined benefit pension plans,
B)   defined contribution pension plans,
C)   401(k)  plans,
D)   Section 403(b)  plans.

Question 20

A plan that is typically funded with the common stock of the employer is the

Accepted Answer

A)   ESOP,
B)   401(k)  plan,
C)   thrift plan,
D)   Keogh plan.

Exam 20: Employee Benefits: Retirement Plans

Which of the following statements is true regarding pension plan vesting?

Correct Answer
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Match the descriptions with their terms: -By exercising a/an _________________, employees can gain some investment flexibility, but they typically will lose the lifetime income guarantee associated with the annuity option.

Correct Answer
verified

Match the descriptions with their terms: -The _________________ generally is stated in a pension plan and represents the earliest age at which the employee can retire and receive full pension benefits.

Correct Answer
verified

Match the descriptions with their terms: -_________________ are retirement savings plans that are designed for use by those who have self-employment income.

Correct Answer
verified

A SIMPLE 401(k) plan is always more attractive than a regular 401(k) plan.

Correct Answer
verified

Contributory plans involve

Correct Answer
verified

Match the descriptions with their terms: -An IRA _________________ involves placing assets formerly held in an IRA or in an employer sponsored retirement plan into a new IRA.

Correct Answer
verified

The ability of employers to take an income tax deduction for contributions to a retirement plan is important for all of the following types of plans except:

Correct Answer
verified

Which of the following is not a tax benefit associated with a qualified pension plan?

Correct Answer
verified

Defined contribution plans use a specified formula to determine the exact amount of the employer's contributions.

Correct Answer
verified

The normal retirement age reflects the earliest age at which employees can retire and receive full pension benefits.

Correct Answer
verified

Employees are not allowed to deduct contributions to contributory qualified pension plans.

Correct Answer
verified

Match the descriptions with their terms: -A/An _________________ uses a formula to compute the monthly benefit payable at retirement.

Correct Answer
verified

A Section 403(b) plan is a viable option for providing retirement benefits for most commercial businesses.

Correct Answer
verified

Correct Answer
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Match the descriptions with their terms: -_________________ require that a record be kept of the account of each employee and that each dollar an employer contributes is associated with a particular employee.

Correct Answer
verified

Lump-sum distributions from employer sponsored pension plans may not be rolled over into individual retirement accounts unless the employee has paid federal income tax on the entire amount of the distribution.

Correct Answer
verified

A plan that is typically funded with the common stock of the employer is the

Correct Answer
verified

Permitted disparity allows a certain degree of discrimination in favor of highly-compensated employees.

Correct Answer
verified

Pensions are usually paid out in the form of an annuity.

Correct Answer
verified

Exam 20: Employee Benefits: Retirement Plans

Which of the following statements is true regarding pension plan vesting?

Correct AnswerverifiedShow Answer

Match the descriptions with their terms: -By exercising a/an _________________, employees can gain some investment flexibility, but they typically will lose the lifetime income guarantee associated with the annuity option.

Correct AnswerverifiedShow Answer

Match the descriptions with their terms: -The _________________ generally is stated in a pension plan and represents the earliest age at which the employee can retire and receive full pension benefits.

Correct AnswerverifiedShow Answer

Match the descriptions with their terms: -_________________ are retirement savings plans that are designed for use by those who have self-employment income.

Correct AnswerverifiedShow Answer

A SIMPLE 401(k) plan is always more attractive than a regular 401(k) plan.

Correct AnswerverifiedShow Answer

Contributory plans involve

Correct AnswerverifiedShow Answer

Match the descriptions with their terms: -An IRA _________________ involves placing assets formerly held in an IRA or in an employer sponsored retirement plan into a new IRA.

Correct AnswerverifiedShow Answer

The ability of employers to take an income tax deduction for contributions to a retirement plan is important for all of the following types of plans except:

Correct AnswerverifiedShow Answer

Which of the following is not a tax benefit associated with a qualified pension plan?

Correct AnswerverifiedShow Answer

Defined contribution plans use a specified formula to determine the exact amount of the employer's contributions.

Correct AnswerverifiedShow Answer

The normal retirement age reflects the earliest age at which employees can retire and receive full pension benefits.

Correct AnswerverifiedShow Answer

Employees are not allowed to deduct contributions to contributory qualified pension plans.

Correct AnswerverifiedShow Answer

Match the descriptions with their terms: -A/An _________________ uses a formula to compute the monthly benefit payable at retirement.

Correct AnswerverifiedShow Answer

A Section 403(b) plan is a viable option for providing retirement benefits for most commercial businesses.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Match the descriptions with their terms: -_________________ require that a record be kept of the account of each employee and that each dollar an employer contributes is associated with a particular employee.

Correct AnswerverifiedShow Answer

Lump-sum distributions from employer sponsored pension plans may not be rolled over into individual retirement accounts unless the employee has paid federal income tax on the entire amount of the distribution.

Correct AnswerverifiedShow Answer

A plan that is typically funded with the common stock of the employer is the

Correct AnswerverifiedShow Answer

Permitted disparity allows a certain degree of discrimination in favor of highly-compensated employees.

Correct AnswerverifiedShow Answer

Pensions are usually paid out in the form of an annuity.

Correct AnswerverifiedShow Answer

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