Retirement Plans Flashcards
ERISA legislation was enacted:
A. To protect employee retirement funds
B. To protect employer retirement funds
C. From employee investment mismanagement
D. From employer investment mismanagement
A and D
The person that is least likely to be a fiduciary to a retirement plan trust are the:
A. Administrator
B. Attorney drawing up the trust document
C. Company offering the plan
D. Participants in the plan
D
Which of the following are settlor function in a pension plan established under ERISA
A. Choosing the type of plan
B. Amending or changing plan options
C. Terminating a plan
D. Acting as an investment manager for the plan
A B and c
The settlor function in a ER I S a plan is to make the business decisions for the plan these include choosing the type of plan or plan options, amending the plan or changing plan options, requiring employee contributions, and terminating the plan.
A top-heavy retirement plan is
A. Permitted under ERISA rules and contributions are tax-deductible
B. Permitted under ERISA rules and contributions are not tax-deductible
C. Permitted under ERISA rules as long as all assets are held by a trustee
D. Prohibited under ERISA rules
B.
Under ERISA, a top-heavy retirement plan is one that disproportionately favors upper level employees by giving them excessive retirement benefits that are not available to lower-level employees. If a plan has deemed to be top-heavy and the contributions will not be tax-deductible making the plan nontax qualified
The investment policy statement for a qualified plan under ERISA will cover which of the following?
A. Specific assets classes in which the plan may invest
B. Asset allocation percentages for each asset class
C. Names and rolls of trustees and plan managers
D. Discussion of investment objective, needs, risk tolerance and investment time horizon
All of the above
Which of the following is covered by ERISA? A. State employee pension plans B. Private employee pension plans C. Individual retirement accounts D. Medical trust savings accounts
B.
ER I S a. protects employees in the private sector that are covered by employer sponsored pension plans from having their pension benefits reduced or taken away by employer miss management of the pension assets
All the following statements are true regarding defined benefit plans except:
A. Contributions made it to the plan can vary from year-to-year
B. Employees with the highest salaries in the fewest years to retirement benefit the most
C. Benefits paid to employees consist of a tax free return of capital and a taxable return of earnings
D. Actuarial tables are used to determine contribution rates for each employee
B.
Which of the following statements are true about Ira accounts?
A. Excess contributions are subject to a 6% penalty tax
B. Excess contributions are subject to a 10% penalty tax
C. Premature withdrawals are subject to a 6% penalty tax
D. Premature with drawls are subject to a 10% penalty
A and d
An individual that has not reached retirement age that has an IRA account dies, splitting the estate equally between his wife and daughter. The wife has a 20 year life expectancy and the daughter has a 40 year life expectancy. What is the maximum period of time over which the assets held in the IRA can be distributed to the beneficiaries?
20 years
Funds can either be distributed over a five-year period or over the life expectancy of the designated beneficiary in this case since there are two beneficiaries named they must be distributed by the expected life expectancy shortest
True or false 457 plans are qualified under ERISA
False
If 457 plan is similar to a 401(k) and 403B plan except that I can only be established by government employers and certain nonprofit employers. These are non-qualified plans because they are discriminatory. They generally are only available as an added benefit to hire earning government employees
True or false distributions taken from a 457 plan at any age are income tax free.
False distributions taken from a 457 plan are always fully taxable as earned income
True or false distributions taken from a 457 plan prior to age 59 1/2 are subject to a 10% penalty tax
False.
A major difference is that there is no 10% penalty tax for early withdrawals from my 457 plan
How much money can a person contribute to a Coverdale ESA per year
$2000. Into any amount of ESA’s
Contributions to a Coverdale ESA are tax-deductible or non-tax deductible
Non-tax deductible
Coverdell ESA contributions maybe used to pay for education expenses only or education expenses at all levels
At all levels
