Module 3

Question 1

What are the primary retirement plan regulations?

Answer 1

ERISA

Internal revenue code

Pension protection act

Question 2

Why was ERISA created?

Answer 2

ERISA was created to form a framework for retirement plan, design funding administration, and communication

Question 3

What’s the primary function of ERISA, what’s its purpose?

Answer 3

To ensure the security of company pension plans

Which federal agency is responsible for the administration and enforcement of ERISA - DOL

Question 4

What is the pension protection act?

Answer 4

The most comprehensive pension reformed legislation since ERISA was enacted in 1974. It was created in 2006.

Question 5

What is the safe Harbor definition of compensation by the IRS?

Answer 5

All wages

Salaries

All amounts included in employees, gross income, including overtime

Commissions fees, tips bonuses

Foreign earned income without regard to the exclusions under IRC section 911 931 and 933

Question 6

Retirement plan common design components include the following six categories

Answer 6

Credited service

Eligibility

Enrollment

Contributions

Vesting

Distribution S

Question 7

Regarding retirement plans, what are the four main types of employee contributions?

Answer 7

Pretax

Post tax

Catch up

Roth

Question 8

Is a Roth contribution pre tax or after tax?

Answer 8

Roth contributions are after tax contributions

Question 9

In a direct contribution plan, what are the four methods of contribution?

Answer 9

Fixed match

Profit related

Service related

Combination

Question 10

What are the three primary mains of distribution for a direct contribution plan?

Answer 10

Lump sum

Installment payments

Purchase annuiiy

Question 11

Define direct contribution distribution types

Lump sum

Installment payments

Purchase of annuity

Answer 11

Lump sum- most common

Installment payments - annual or monthly payments made with the amount of each payment equal to the total account balance divided by the number of remaining payments, elected

Purchase of an annuity - plan can provide a purchase of annuity. A money purchase plan requires annuities to be offered.

A joint and survivor annuity is the automatic form of payment for married plan participants for any plan that offers annuities

Question 12

What are the rollover/ tax withholding rules?

Answer 12

Rule 1 Tax
If a distribution is not rolled over directly into another qualified plan or IRA 20% withholding

Rule 2 split distribution
A participant may retain a portion of a distribution and roll over the remainder into another qualified plan or IRA

Rule number three
Written notice of election must be given to the participant at least 30 days before a no later than 180 days before distribution
-employee may waive the 30 day requirement

Rule number four

Exceptions to the withholding requirement
- required minimum distributions
- non-taxable distributions
- Return of excess referrals or contributions
- Deed distributions for defaulted plan loans
- Hardship distributions

Question 13

Which of the following describes the period of employment recognized in a benefit formula for retirement calculation purposes

• Eligibility
• contributions
• vesting
• Credited service

Answer 13

• Credited service

Question 14

Which form of retirement contribution allows participants to make after tax contributions, and then take those contributions and earnings completely tax-free at retirement
— pretax
- Post tax
-Roth
- Catch up

Answer 14

• Roth

Question 15

Which distribution option is most commonly taken at employee termination

• an annuity
• lump sum
• Installments
• stock

Answer 15

• lump sum