Exam 17: Employee Benefits: Retirement Plans

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.

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

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?

All of the following statements about 403(b)plans are correct EXCEPT

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 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.

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

Lynn works for a state university.In addition to her regular pension plan,Lynn established 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

RST Company offers a qualified retirement plan.Each employee contributes 4 percent of his or her pretax income to the plan,and RST matches each 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?

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.The early retirement age is the earliest age at which an employee can retire without receiving actuarially reduced benefits.

ABC Company offers a qualified retirement plan.ABC selected a funding instrument with an insurer in which the insurer guarantees a relatively high interest rate for a number of years on a lump sum deposit.This funding instrument is called a(n)

Which of the following statements is (are)true with respect to profit-sharing plans? I.There is no limit on the amount that an employer can contribute annually to an employee's account under a profit sharing plan. II.Profit sharing plans offer greater funding flexibility for employers than under other qualified plans.

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

Which of the following statements is (are)true regarding cash-balance pension plans? I.Cash balance plans are defined contribution plans. II.Under a cash balance plan,the employer creates an actual account for each employee into which the employer makes contributions and allocates investment gains and losses.

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

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?

Early distributions from qualified retirement plans are assessed a 10 percent penalty tax.However,there are some exceptions to this rule.All of the following distributions would be exempt from the penalty tax EXCEPT

Which of the following statements about retirement benefits under pension plans is true?

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? I.A distribution made to an employee with a qualifying disability. II.A distribution made to a beneficiary or to the employee estate's after the employee's death.

All the following statements about SIMPLE retirement plans are true EXCEPT