EXAM 1 Flashcards
(144 cards)
Service is the basis on which a plan determines all of the following EXCEPT:
contributions
The initial year of service for eligibility purposes is always based on which of the
following?
Employment year
Which of the following is NOT a test that a qualified plan must satisfy?
Highly Compensated Test
For a defined contribution plan, annual additions include all of the following EXCEPT?
Plan fees and expenses
Top-heavy retirement plans using graded vesting require at least _______ vesting after
3 years.
40%
Which of the following is NOT a factor in determining key employee status?
An officer having compensation in excess of 2 times the annual addition limit
A plan is determined to be top heavy with respect to a plan year if the ratio determined
by dividing the account balance of key employees by the account balances of all
employees EXCEEDS:
60%
ERISA vesting requirements in non-top heavy plans:
require years to be counted, if the employee was paid for at least 1000 hours.
A defined contribution plan is top heavy when the account balances of key employees
exceed ________ of the total account balances, including distributions made during the
last five years.
60%
A key employee is defined as follows EXCEPT for:
one of the ten largest owners of the employer.
A minimum non-integrated contribution of 3% of compensation must be provided to
eligible participants for each year in which a key employee receives an allocation of at
least 3% in order to remedy:
a top-heavy situation
For post Pension Protection Act employer Defined Contribution funds, cliff-vesting
schedules require employees to become 100% vested after:
3 years.
For Post-Pension Protection Act employer contributions, minimum graded vesting for
non-top-heavy plans after 5 years is:
80%
Which one of the following is an acceptable vesting schedule for a qualified pension
plan that is not top-heavy for Post Pension Protection Act employer Defined
Contribution Plans?
Immediate 100% vesting for all contributions
Which of the following vesting schedules may NOT be applied to either elective or
matching employer contributions?
4-7 year graded
Which of the following is NOT a valid reason for maintaining a qualified retirement
plan?
The law requires that every company with 25 or more employees maintain a
qualified retirement plan.
Growth in qualified retirement plans is:
tax deferred.
Which of the following is NOT a reason for maintaining a qualified retirement plan?
The law requires all companies with over 35 employees to offer one.
Which of the following is NOT true for all qualified retirement plans?
Funds are tax exempt upon withdrawal after age 59 1/2.
Today, an individual’s retirement income will most likely:
have to take inflation into account.
“Qualified” with regard to a pension plan means that:
contributions to the plan by the employer are generally tax-deductible.
A qualified plan participant who owns 100% of his or her retirement account is said to
be:
fully vested.
Which of the following is NOT a tax advantage of qualified pension plans?
Tax-free distribution of plan death benefits
The most widely accepted rationale for private pension plans is known as:
the deferred wage concept.