Exam 17: Employee Benefits: Retirement Plans

Which of the following statements about retirement ages in defined benefit pension plans is (are)true? I.The normal retirement age in most plans is 65. II.In a defined-benefit plan,the early retirement age is the earliest age an employee can retire with full,unreduced benefits.

Harrison Company just received notice from the Internal Revenue Service that there is a problem with its retirement plan.Because over 60 percent of the benefits are designated for highly compensated employees,a special set of rules apply.These rules require more rapid vesting for non-highly compensated employees and certain minimum benefits for non-highly compensated employees.What name is given to such plans?

In the context of employee benefits,the term "discrimination" refers to benefit comparisons between

All the following statements concerning a Roth 401(k)plan are true EXCEPT

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

Which of the following statements about the tax implications of qualified pension plans is true?

As Social Security slants benefits in favor of lower-paid workers,the Internal Revenue Service 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

Which of the following statements about withdrawals from Section 401(k)plans is (are)true? I.The penalty tax does not apply to hardship withdrawals. II.Withdrawals may be made without penalty at age 59.5 or older.

Which of the following statements concerning defined-benefit pension plans is (are)true? I.The contribution rate by the employer varies from year to year. II. The retirement benefit is not known in advance.

What are the minimum age and service requirements that can be imposed on employees eligible to participate in a retirement plan?

Rita went to work for a manufacturing company.The company offers a defined-benefit pension plan.The benefit at retirement is equal to 1.5 percent multiplied by years of service with the company,with the result 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

Which of the following statements about the protection provided by the Pension Benefit Guaranty Corporation is (are)true? I.Only defined benefit plans are insured. II.Only benefits that are not yet vested are guaranteed.

Which of the following statements about trust fund plans is (are)true? I.The trustee typically purchases annuities for retiring employees. II.The trustee guarantees the adequacy of the fund to pay the promised benefits.

Which of the following statements about the minimum vesting standards for a qualified defined benefit plan is (are)true? I.Under cliff vesting,an employee must be at least 50 percent vested after 5 years of service. II.Under graded vesting,an employee must be at least 20 percent vested after 3 years of service and 100 percent vested after 7 years.

Which of the following statements is (are)true with respect to vesting under a qualified retirement plan? I.Vesting helps to reduce labor turnover. II.An employee who terminates employment after four years of service has no vested retirement benefit under graded vesting.

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

Vesting refers to

Under a unit-benefit formula,benefits are a function of both

Which of the following statements about SIMPLE retirement plans is true?

A financial institution that provides for the accumulation or administration of the funds that will be used to pay pension benefits is called a