Module 1 - Intronto Retirement Plans

Question 1

What are the five components of total rewards?

Answer 1

Compensation
Well-being
Benefits
Development
Recognition

Question 2

What are the objectives of employer, sponsored retirement plans?

Answer 2

Generate high value with employees
Engage employee performance
Offer maximum tax benefits

Provide employee opportunity to build retirement savings

Stay Competitive

Question 3

Employee retirement includes retirement, income needs, and sources of income

What is the percentage of pre-retirement gross income that an employee will need as income replacement during retirement ?

Answer 3

60% to 90% this amount can vary depending on employees income strategy for retirement

Question 4

Considering the four pillar approach to retirement income sources

What are the four primary sources of income?

Answer 4

Post retirement employment

Social Security

Employer, sponsored plans

Personal savings

Question 5

What’s the purpose of employer sponsored retirement plans?

Answer 5

Provide retirement income to employees

Result in deferral of income

Tax classifications (qualified, or nonqualified)

Question 6

Qualified versus nonqualified, employer, sponsored retirement plans

What is a qualified plan?

Answer 6

Meets IRS requirements and offers tax advantages to employer, and/or the employee

Retirement plans that meet the requirements of EIRS a and the IRS 

Compliance provides additional confidence and protections to the plan, for example

Assets are separated from general assets into a trust

Required annual NDT

Compliance with annual contribution limits

Annual and periodic legal filings

Question 7

Qualified versus nonqualified plans, what’s a nonqualified plan?

Answer 7

Provide benefits and access of those possible within qualified plans however, the benefits did not receive the same favorable tax treatment as qualified plans

Value of nonqualified plans may be lost if the organization declares bankruptcy

Nonqualified plans are generally limited to the top 10% of the workforce

Nonqualified plans allowed deferral of significantly more pretax earnings without annual filings and contribution limits

Restrictions on timing and accessing funds and subject to forfeiture in the event of financial insolvency

Governed by IRS section 409 a

Question 8

What IRS section governs nonqualified retirement plans

Answer 8

IRS section 409 a

Question 9

List examples of nonqualified plans by name

Answer 9

Top hat plans

Supplemental executive retirement plans

Excess benefit plans

Question 10

Does a SERP require employer funding

Answer 10

No

Question 11

What is ERISA

Answer 11

The federal act regulating private employer, pension, and welfare programs, covers eligibility reporting a disclosure requirements, fiduciary standards for the financial management of retirement funds, tax incentives for funding, pension plans, and establishes the pension benefit guarantee corporation PBGC

Question 12

What governmental authority administers ERISA

Answer 12

Department of labor

Question 13

What are three types of qualified retirement plans?

Answer 13

Defined contribution plans

Defined benefit plans

Hybrid plans

Question 14

Define defined contribution plans

Answer 14

Provides future income based solely on

The amount contributed to the participants plan

 Combination of savings, profit-sharing, money, purchase, employee stock ownership plan

• In these cases, retirement is unknown until retirement

Question 15

What is the defined benefit plan?

Answer 15

The retirement benefit is clearly defined

Examples:

Final highest average pay

Career average pay

Flat benefit

Question 16

Define hybrid plans

Answer 16

Exhibit characteristics of both defined benefit, and defined contribution plans

Example

Target benefits
Cash balance
Pension equity
Floor offset

Question 17

Why does the government through the IRS incentivize qualified plans

Answer 17

Reduces pressure on government social programs, social Social Security

En that retirement plans benefit all employees

Encourages employees to plan for their retirement

Question 18

What are advantages of qualified plans?

Answer 18

Employer contribution plans are deductible

Participant taxation is deferred until the distribution of benefits

Question 19

What are advantages of qualified plans?

Answer 19

Employer contribution plans are deductible

Participant taxation is deferred until the distribution of benefits

Question 20

Who determines if a retirement plan is qualified

Answer 20

IRS

Question 21

In order for a plan to qualify, an organization must submit a plan document for approval by the IRS

What risk exist associated with the plan document

Answer 21

Planes can occur serious penalties for not following the plan document and associated communications both in writing and timing errors

Question 22

What are the two main considerations regarding an employer plan objective?

Answer 22

Balance financial risk

Establish Company culture

Question 23

Considering the impact of Defined benefit plan performance

Discuss who is responsible for investment decisions

Answer 23

The employer is responsible for making investment decisions and has the solve responsibility for ensuring the benefit plan has assets future

If investment performance is better than expected, employer, benefits

Investment performance is worse than expected must make up the difference

Question 24

Considering the impact of plans performance discuss funding of direct contribution plans

Answer 24

The employee has the risk both upside and downside for the investment and performance of funds

Investment performance is better than expected the employee has more of a benefit

Investment performance is lower than expected employee has less of a benefit when they retire

Question 25

Why is it important to align retirement plan objectives with organizational strategies?

To ensure they support the organizations strategies

To encourage employees to plan for retirement

To ensure employer, contributions or tax deductible

To provide additional income, security employees

Answer 25

To ensure they support the organizations strategies

Question 26

Which of the following best describes a typical post retirement change that may affect an individuals requirement income needs

Retirees are no longer paying Social Security taxes

Medicare covers 100% of healthcare expenses

Distributions from retirement accounts are not classified as taxable income

The effective income tax rate does not apply to retirees

Answer 26

Retirees no longer pay Social Security taxes

Question 27

Which of the following is a mandatory retirement contributory program?

Employer sponsored DB plan

Social Security

Employer sponsored DC plan

Individual retirement account

Answer 27

Social Security

Question 28

Which statement best describes a qualified plan

Offer certain tax advantages to employer and employee

Increases pressure on government social programs

Provides benefits that do not meet nondiscrimination rules

Provides a guarantee value at retirement from the workforce

Answer 28

Offers certain tax advantages to the employer and or the employee

Question 29

The amount of a benefit paid to a participant in a direct contribution retirement plan is dependent on, which of the following

Benefits promised by employer

Asset held in common pool

Actuarial assumptions

Employees contributions to plan

Answer 29

Employees contributions to plan