Exam 17: Employee Benefits: Retirement Plans

JKL Company just converted its traditional defined-benefit plan to another type of plan.Under the plan,benefits are defined in terms of a hypothetical account balance,with retirement benefits dependent upon the value of the participant's account at retirement.Each year,employees receive an interest rate credit and a pay credit which is a specified percentage of compensation.This type of plan is called a

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

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

Which of the following statements about Roth 401(k)plans is true? I.Contributions to a Roth 401(k)plan are made with before-tax dollars. II.Qualified distributions from a Roth 401(k)are received income-tax free.

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.

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

Under a 401(k)plan,what is compared to determine if the plan unfairly discriminates in favor of highly compensated employees?

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

Which of the following statements is (are)true with respect to vesting under a qualified defined benefit 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 cliff vesting.

To encourage low- to moderate-income workers to save for retirement,a tax credit called the Saver's Credit is available.Which statement about tax credits and tax deductions is true?

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.

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 about pension funding agencies and funding instruments is true?

Special vesting rules apply to qualified defined contribution plans with voluntary employee contributions and matching employer contributions.Which of the following statements is (are)true with respect to these vesting rules? I.Employer contributions must vest immediately. II.Graded vesting is permitted,and employer contributions must be 20 percent vested after 2 years,with an additional 20 percent vested in each of the next 4 years.

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 concerning a Roth 401(k)plan are true EXCEPT

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

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

ABC Company offers a qualified retirement plan.ABC selected a funding instrument with an insurer in which the insurer promised to pay a specified interest rate for a number of years on a lump sum deposit.This funding instrument is called a