Question 1

Which of the following statements about Roth IRAs is false?

Accepted Answer

A) contributions made to a Roth IRA are not tax deductible, but are tax-free when withdrawn 
B) withdrawals of contributions made at any time are not subject to taxation 
C) withdrawals of investment earnings are not subject to taxation as long as the taxpayer is at least 55 years old and the Roth IRA has existed for at least five years 
D) withdrawals of investment earnings are not subject to taxation if they are used to (up to $10,000 worth)to buy a first home, and if the Roth IRA has existed for at least five years 
A) contributions made to a Roth IRA are not tax deductible, but are tax-free when withdrawn 
B) withdrawals of contributions made at any time are not subject to taxation 
C) withdrawals of investment earnings are not subject to taxation as long as the taxpayer is at least 55 years old and the Roth IRA has existed for at least five years 
D) withdrawals of investment earnings are not subject to taxation if they are used to (up to $10,000 worth)to buy a first home, and if the Roth IRA has existed for at least five years

Question 2

Which of the following is not a reasonable justification of employee benefits from the point of view of the employer?

Accepted Answer

A) take advantage of business tax benefits 
B) retain, motivate and attract employees 
C) can legally funnel disproportionately high benefits to the owners on a tax advantaged basis 
D) allows freedom of benefit selection as opposed to the government mandating employee minimum benefits 
A) take advantage of business tax benefits 
B) retain, motivate and attract employees 
C) can legally funnel disproportionately high benefits to the owners on a tax advantaged basis 
D) allows freedom of benefit selection as opposed to the government mandating employee minimum benefits

Question 3

Explain the difference between a defined contribution and a defined benefit plan.

Accepted Answer

A defined benefit plan uses a formula ap

Question 4

The traditional "tripod approach" to economic security assumed that who would provide economic security for the individual worker?

Accepted Answer

A) the employer and the worker 
B) the employer and the government 
C) the government and the worker 
D) the employer, the worker, and the government 
A) the employer and the worker 
B) the employer and the government 
C) the government and the worker 
D) the employer, the worker, and the government

Question 5

What are the rules to be considered a qualified plan?

Accepted Answer

The plan must 1)be written,2)

Question 6

A defined contribution retirement plan defines the amount of benefits to be contributed to the employee during retirement.

Accepted Answer

A) True 
 B)False

Question 7

The popularity of defined benefit pension plans has:

Accepted Answer

A) increased 
B) decreased 
C) remained about the same 
D) become so low that these plans are no longer legal 
A) increased 
B) decreased 
C) remained about the same 
D) become so low that these plans are no longer legal

Question 8

Which of the following patterns would not be allowed in determining the face amount of life insurance in a qualified group life insurance plan?

Accepted Answer

A) 150% of gross annual wage 
B) all hourly workers $100,000, all salaried workers $150,000 
C) $50,000 for each employee 
D) Bill Gates, CEO, $500,000 and all other workers $100,000 
A) 150% of gross annual wage 
B) all hourly workers $100,000, all salaried workers $150,000 
C) $50,000 for each employee 
D) Bill Gates, CEO, $500,000 and all other workers $100,000

Question 9

Which of the following is not a factor that has caused the decline in defined benefit plans in the U.S.?

Accepted Answer

A) increasing mobility of the workforce 
B) global competition causing employers to reduce expenses 
C) reduced employer liability for pension plan results under a defined benefit plan 
D) employee, and not the employer, bears the investment risk of a defined contribution plan 
A) increasing mobility of the workforce 
B) global competition causing employers to reduce expenses 
C) reduced employer liability for pension plan results under a defined benefit plan 
D) employee, and not the employer, bears the investment risk of a defined contribution plan

Question 10

Wex Enterprises hires you as a benefit consultant. Mr.Wex wants to reduce the number of employees covered by the company's group health insurance plan. Which of the following reasons would you advise him to use to legally determine who to exclude from the health insurance plan?

Accepted Answer

A) health status of the employee 
B) job classification (hourly employee versus salaried employee) 
C) genetic information about employees 
D) disability of employees 
A) health status of the employee 
B) job classification (hourly employee versus salaried employee) 
C) genetic information about employees 
D) disability of employees

Question 11

Instead of purchasing group health insurance,many employers now self-fund health benefits for their employees. Who normally administers such a self-funded health program?

Accepted Answer

A) the risk management department 
B) the human resources department 
C) state health insurance pools 
D) a third-party administrator 
A) the risk management department 
B) the human resources department 
C) state health insurance pools 
D) a third-party administrator

Question 12

What is the main reason for the increase in employee benefit costs during the last 15 years?

Accepted Answer

A) cost of funding retirement income 
B) cost of sick leave and worker absenteeism 
C) cost of health insurance 
D) none of the above 
A) cost of funding retirement income 
B) cost of sick leave and worker absenteeism 
C) cost of health insurance 
D) none of the above

Question 13

Suppose you have a 401(k)plan,and you would like to draw the money out when you are age 45. You want the money to send your child to college. What will happen if you draw all the money out and close the account?

Accepted Answer

A) You will have to pay income taxes on the withdrawal 
B) You will have to pay income taxes, plus a tax penalty, on the withdrawal 
C) You will receive the money tax free, since you paid taxes on it when you deposited it 
D) You will only have to pay taxes on the amount of money drawn out that represents interest earned on your deposits 
A) You will have to pay income taxes on the withdrawal 
B) You will have to pay income taxes, plus a tax penalty, on the withdrawal 
C) You will receive the money tax free, since you paid taxes on it when you deposited it 
D) You will only have to pay taxes on the amount of money drawn out that represents interest earned on your deposits

Question 14

A qualified benefit plan must not discriminate in favor of highly compensated employees.

Accepted Answer

A) True 
 B)False

Question 15

Which one of the following is not a typical exclusion/limitation in group major medical plans?

Accepted Answer

A) cosmetic surgery 
B) physical exams 
C) emergency medical care 
D) mental health expenses 
A) cosmetic surgery 
B) physical exams 
C) emergency medical care 
D) mental health expenses

Question 16

Which of the following statements about IRAs is false?

Accepted Answer

A) Withdrawals made after age 59 are taxed as ordinary income in the year they are received 
B) Only deductible contributions and tax deferred interest paid out during retirement are taxed as income 
C) Early withdrawal from an IRA causes a 20% tax penalty to be incurred 
D) Withdrawal of IRA funds must begin by age 70. 
A) Withdrawals made after age 59 are taxed as ordinary income in the year they are received 
B) Only deductible contributions and tax deferred interest paid out during retirement are taxed as income 
C) Early withdrawal from an IRA causes a 20% tax penalty to be incurred 
D) Withdrawal of IRA funds must begin by age 70.

Question 17

Under ERISA,which of these is not required of a qualified plan?

Accepted Answer

A) plans must cover all full time employees with at least one year of service 
B) plans should not provide disproportionately high benefits to the highly compensated employees 
C) defined benefit plans must be funded in advance according to ERISA requirements 
D) all employees must receive the same percentage of wages as benefits 
A) plans must cover all full time employees with at least one year of service 
B) plans should not provide disproportionately high benefits to the highly compensated employees 
C) defined benefit plans must be funded in advance according to ERISA requirements 
D) all employees must receive the same percentage of wages as benefits

Question 18

Carlos and Mary are married,and covered under Carlos' group health plan provided by his employer. Carlos dies. How long can Mary continue her health coverage,according to COBRA provisions?

Accepted Answer

A) 0 months 
B) 18 months 
C) 24 months 
D) 36 months 
A) 0 months 
B) 18 months 
C) 24 months 
D) 36 months

Question 19

Our government gets several advantages from the private employee benefit systems. Which of the following is not one of those advantages?

Accepted Answer

A) Fewer people are dependent on welfare programs 
B) The burden on the Social Security program is reduced if people have private pensions and life insurance 
C) Government control of the economy is avoided if the funds to finance benefits remain in private hands 
D) All of the above are advantages 
A) Fewer people are dependent on welfare programs 
B) The burden on the Social Security program is reduced if people have private pensions and life insurance 
C) Government control of the economy is avoided if the funds to finance benefits remain in private hands 
D) All of the above are advantages

Question 20

The term "tax deferral" refers to the ability to pay taxes at a later date on otherwise currently taxable income.

Accepted Answer

A) True 
 B)False

Exam 21: Employee Benefits

Which of the following statements about Roth IRAs is false?

Which of the following is not a reasonable justification of employee benefits from the point of view of the employer?

Explain the difference between a defined contribution and a defined benefit plan.

The traditional "tripod approach" to economic security assumed that who would provide economic security for the individual worker?

What are the rules to be considered a qualified plan?

A defined contribution retirement plan defines the amount of benefits to be contributed to the employee during retirement.

The popularity of defined benefit pension plans has:

Which of the following patterns would not be allowed in determining the face amount of life insurance in a qualified group life insurance plan?

Which of the following is not a factor that has caused the decline in defined benefit plans in the U.S.?

Wex Enterprises hires you as a benefit consultant. Mr.Wex wants to reduce the number of employees covered by the company's group health insurance plan. Which of the following reasons would you advise him to use to legally determine who to exclude from the health insurance plan?

Instead of purchasing group health insurance,many employers now self-fund health benefits for their employees. Who normally administers such a self-funded health program?

What is the main reason for the increase in employee benefit costs during the last 15 years?

Suppose you have a 401(k)plan,and you would like to draw the money out when you are age 45. You want the money to send your child to college. What will happen if you draw all the money out and close the account?

A qualified benefit plan must not discriminate in favor of highly compensated employees.

Which one of the following is not a typical exclusion/limitation in group major medical plans?

Which of the following statements about IRAs is false?

Under ERISA,which of these is not required of a qualified plan?

Carlos and Mary are married,and covered under Carlos' group health plan provided by his employer. Carlos dies. How long can Mary continue her health coverage,according to COBRA provisions?

Our government gets several advantages from the private employee benefit systems. Which of the following is not one of those advantages?

The term "tax deferral" refers to the ability to pay taxes at a later date on otherwise currently taxable income.

Fundamentals and Terminology

Defining the Insurable Event

Risk Management

Financial Services Companies

Insurance Occupations

the Insurance Market: the Economic Problem

Insurance Regulation

Insurance Contracts

Basic Property and Liability Insurance Contracts

Homeowners Insurance

the Personal Auto Policy

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions And Options

Annuities

Medical Expense and Disability Insurance

Advanced Topics in Risk Management

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Bonding,Crime Insurance and Reinsurance

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