Test 33-66

Question 1

Most companies have goals for their defined contribution retirement plans that fall into one or more of three categories. Which of the following is (are) among these categories?

I. Paternalism—the desire, or perhaps the feeling of obligation, to help employees prepare adequately for retirement

II. Competitive benefits—benefits to attract and retain workers

III. Public policies alignment— flexible plan provisions designed to support government labor participation targets

Answer 1

I. Paternalism—the desire, or perhaps the feeling of obligation, to help employees prepare adequately for retirement

II. Competitive benefits—benefits to attract and retain workers

Question 2

Which of the following statements regarding Medicare administrative contractors is (are) correct?

I. They process and pay claims for Medicare Advantage plans.

II. They are selected through a competitive procedure.

III. Their responsibilities include maintaining records, establishing controls, and safeguarding against fraud and abuse.

Answer 2

II. They are selected through a competitive procedure.

III. Their responsibilities include maintaining records, establishing controls, and safeguarding against fraud and abuse.

Question 3

Which of the following statements regarding the differences between a market-driven approach to employee plan communications and the traditional approach to such communications is (are) correct?

I. In the traditional approach, the communication tone is direct, while it is neutral in the market-driven approach.

II. In the traditional approach, messages are sent to a single mass audience, but messages are targeted to specific audiences in the market-driven approach.

III. Success is hard to measure in the traditional approach, while it is directly measurable in the market-driven approach.

Answer 3

II. In the traditional approach, messages are sent to a single mass audience, but messages are targeted to specific audiences in the market-driven approach.

III. Success is hard to measure in the traditional approach, while it is directly measurable in the market-driven approach.

Question 4

Which of the following is (are) key governing laws or industry standards that require Employee Retirement Income Security Act (ERISA) service provider management of regulated personal information?

I. The Gramm-Leach-Bliley Act controlling the ways financial institutions deal with private information of individuals

II. Health Insurance Portability and Accountability Act (HIPAA) and its business associate requirements

III. Federal Trade Commission (FTC) data security enforcement actions against company failures to oversee service providers with access to personal information

Answer 4

I. The Gramm-Leach-Bliley Act controlling the ways financial institutions deal with private information of individuals

II. Health Insurance Portability and Accountability Act (HIPAA) and its business associate requirements

III. Federal Trade Commission (FTC) data security enforcement actions against company failures to oversee service providers with access to personal information

Question 5

When differentiating between the core services provided by third-party administrators (TPAs) and those provided by plan advisors, which of the following is (are) subject matters in which plan advisors often provide expertise?

I. Mutual funds

II. Nonqualified deferred compensation arrangements

III. Target date fund glide paths

Answer 5

I. Mutual funds

II. Nonqualified deferred compensation arrangements

III. Target date fund glide paths

Question 6

Which of the following statements regarding information collected in the process of conducting a wellness program is (are) correct?

I. If electronic wearable fitness devices are owned by the employer, then any data collected from them may legally also be the property of the employer.

II. By law, information contained in a personal health information (PHI) file must be destroyed after the employee participant leaves the firm.

III. Investigations have confirmed that wellness vendors rarely sell the data entrusted to them by employee participants.

Answer 6

I. If electronic wearable fitness devices are owned by the employer, then any data collected from them may legally also be the property of the employer.
o them by employee participants.

Question 7

When selecting a plan service provider and evaluating the cybersecurity issues involved in the process, an Employee Retirement Income Security Act (ERISA) plan fiduciary should consider taking which of the following steps?

I. Establishing due diligence standards for vetting and tiering providers based on the sensitivity of data being shared

II. Drafting a clear, binding contract that transfers fiduciary liability to the plan’s service providers

III. Conducting periodic risk assessments

Answer 7

I. Establishing due diligence standards for vetting and tiering providers based on the sensitivity of data being shared

III. Conducting periodic risk assessments

Question 8

Which of the following statements regarding whether or not a severance arrangement is considered an employee benefit plan and subject to the Employee Retirement Income Security Act (ERISA) is (are) correct?

I. Court cases have concluded that oral arrangements can constitute a severance plan and become regulated by ERISA.

II. A one-time payment to an executive at the termination of employment will definitely constitute a severance plan subject to ERISA.

III. If termination payments extend over a period of years, the plan will certainly be subject to ERISA as a severance arrangement.

Answer 8

I. Court cases have concluded that oral arrangements can constitute a severance plan and become regulated by ERISA.

Question 9

Which of the following statements regarding qualified longevity annuity contracts (QLACs) is (are) correct?

I. Currently, the value of a QLAC is excluded for required minimum distribution (RMD) purposes from an individual’s account balance.

II. Defined benefit plans can utilize QLACs.

III. Contracts with cash surrender values can qualify for a QLAC.

Answer 9

I. Currently, the value of a QLAC is excluded for required minimum distribution (RMD) purposes from an individual’s account balance.

Question 10

A recent study calculated the relative impact of three drivers of worker wealth accumulation upon retirement. The drivers were savings, investing and fees. Which of the following statements regarding these wealth accumulation drivers is (are) correct?

I. The most important driver, by far, was saving.

II. Attempting to get the lowest level of fees might detract from fiduciary oversight and investment selections.

III. The level of fees had a very major relative impact.

Answer 10

I. The most important driver, by far, was saving.

II. Attempting to get the lowest level of fees might detract from fiduciary oversight and investment selections.

Question 11

Which of the following statements regarding payroll taxes and employee benefit plans is (are) correct?

I. Employees and employers pay the same rate of payroll taxes on wages up to the Social Security tax wage base.

II. Once wages exceed the Social Security tax wage base, payroll taxes are only paid by employees.

III. Distributions from a tax-sheltered retirement plan will be subject to income taxes but not to any payroll taxes.

Answer 11

I. Employees and employers pay the same rate of payroll taxes on wages up to the Social Security tax wage base.

.

III. Distributions from a tax-sheltered retirement plan will be subject to income taxes but not to any payroll taxes.

Question 12

Which of the following statements regarding the tax treatment of 401(k) plans is (are) correct?

I. Employee elective (i.e., pretax) deferrals and employer matching contributions are not considered wages and are not subject to federal income tax (FIT) withholding.

II. Employee elective deferrals are not subject to Federal Insurance Contributions Act (FICA) or Federal Unemployment Tax Act (FUTA) taxes.

III. Employer matching contributions are not subject to FICA and FUTA taxes.

Answer 12

I. Employee elective (i.e., pretax) deferrals and employer matching contributions are not considered wages and are not subject to federal income tax (FIT) withholding.

III. Employer matching contributions are not subject to FICA and FUTA taxes.

Question 13

Which of the following categories of current or former family members of deceased workers may be entitled to Social Security survivor benefits?

I. Dependent parents aged 62 or older

II. Surviving divorced spouses with children younger than age 16

III. Surviving spouses regardless of their age

Answer 13

I. Dependent parents aged 62 or older

II. Surviving divorced spouses with children younger than age 16

Question 14

Which of the following statements regarding prudent Employee Retirement Income Security Act (ERISA) investments is (are) correct?

I. Modern portfolio theory is an important investment concept but not one associated with the management of ERISA plan assets.

II. ERISA investments, to be prudent, must always follow mainstream and popular strategies.

III. Prudent investing is not judged on the basis of how the investment performed (i.e., its rate of return).

Answer 14

III. Prudent investing is not judged on the basis of how the investment performed (i.e., its rate of return).

Question 15

Which of the following statements regarding the Employee Retirement Income Security Act’s main requirements for plan assets is (are) correct?

I. Plan assets may be used only to pay plan benefits and cannot be used to pay administration expenses.

II. A fidelity bond must be purchased to cover every person who handles plan funds.

III. All plan assets must be held in a legal trust.

Answer 15

II. A fidelity bond must be purchased to cover every person who handles plan funds.
.

Question 16

Which of the following statements regarding confidentiality protections and the data collection associated with wellness programs is (are) correct?

I. It is well-settled law that the Health Insurance Portability and Accountability Act applies to hospitals, doctor’s offices, insurance companies and wellness providers.

II. Employees should be made aware that wellness programs might involve privacy risks.

III. Many wellness programs are subject to rigorous regulations from state health departments.

Answer 16

II. Employees should be made aware that wellness programs might involve privacy risks.

Question 17

Which of the following is (are) purposes served by international pension plans (IPPs)?

I. An IPP can greatly reduce the total pension costs for a company.

II. An IPP can be used as a plan option in locations with weak retirement systems.

III. An IPP can be used as a retirement plan for expatriates who are ineligible for local retirement systems that require citizenship.

Answer 17

II. An IPP can be used as a plan option in locations with weak retirement systems.

III. An IPP can be used as a retirement plan for expatriates who are ineligible for local retirement systems that require citizenship.

Question 18

Which of the following statements regarding an Employee Retirement Income Security Act (ERISA) plan document is (are) correct?

I. All plans must file their plan document within 60 days with the Employee Benefits Security Administration (EBSA) agency.

II. The plan fiduciary is obligated to follow the terms and conditions of the plan, as long as the plan is compliant with the law.

III. ERISA specifically defines what should be included in a plan document.

Answer 18

II. The plan fiduciary is obligated to follow the terms and conditions of the plan, as long as the plan is compliant with the law.

Question 19

Which of the following statements regarding the accounting and reporting requirements for defined benefit pension plans (in FASB’s Accounting Standards Codification (ASC) Topic 960) is (are) correct?

I. The plan’s financial statements should be prepared on the cash basis of accounting, not the accrual basis.

II. Accumulated plan benefit information may not be disclosed in the notes to the financial statements.

III. The actuarial present value of accumulated plan benefits should be based on employees’ earnings and service rendered before the measurement date.

Answer 19

III. The actuarial present value of accumulated plan benefits should be based on employees’ earnings and service rendered before the measurement date.

Question 20

Which of the following statements regarding the Social Security earnings test is (are) correct?

I. The earnings test applies only to dependents of a retired worker.

II. The earnings test starts after attainment of the full retirement age.

III. The earnings test does not apply to investment income, dividends, interest, rents and annuity payments.

Answer 20

III. The earnings test does not apply to investment income, dividends, interest, rents and annuity payments.

Question 21

Which of the following would be treated as an Employee Retirement Income Security Act health and welfare plan?

I. Short-term, unfunded disability income plan

II. Short-term, insured disability income plan

III. Compensation paid to an employee while on active military leave

Answer 21

II. Short-term, insured disability income plan

Question 22

Which of the following statements regarding the plan document for an Employee Retirement Income Security Act (ERISA) employee welfare benefit plan is (are) correct?

I. ERISA requires every ERISA health and welfare plan to be established and maintained in writing.

II. An ERISA plan may still exist even if no plan document exists.

III. If the plan is insured, an insurance company’s master contract or summary of benefits is ordinarily sufficient to serve as a legal plan document.

Answer 22

I. ERISA requires every ERISA health and welfare plan to be established and maintained in writing.

II. An ERISA plan may still exist even if no plan document exists.

Question 23

Internal controls for employee benefit plans generally fall into specific major categories. Which of the following is (are) included among these major categories of internal controls?

I. Plan documentation and any amendments

II. Plan testing and administration

III. Controls at any third-party administrator

Answer 23

I. Plan documentation and any amendments

II. Plan testing and administration

III. Controls at any third-party administrator

Question 24

Which of the following statements regarding Medicare Part D is (are) correct?

I. Part D is voluntary.

II. Part D provides prescription drug insurance coverage.

III. Part D offers premium and cost-sharing subsidies for low- income enrollees.

Answer 24

I. Part D is voluntary.

II. Part D provides prescription drug insurance coverage.

III. Part D offers premium and cost-sharing subsidies for low- income enrollees.

Question 25

Which of the following statements regarding home health agency (HHA) care under Medicare is (are) correct?

I. It may be provided in the residence of a homebound beneficiary.

II. It may provide full-time nursing care if medically necessary.

III. It is covered by Part D of Medicare.

Answer 25

I. It may be provided in the residence of a homebound beneficiary.

Question 26

The introduction of the Medicare program in 1965 led to an explosive demand and cost acceleration in the U.S. health care system. Which of the following has (have) been cited as a key factor that contributed to this explosive situation?

I. The abandonment of the traditional “usual, customary and reasonable” rate reimbursement system.

II. A third-party payment system (the state) that required complex claims adjudication and whose early administrators engaged in massive fraudulent activities.

III. A fee-for-service reward structure for providers that generated incentives for unnecessary volumes of medical procedures.

Answer 26

III. A fee-for-service reward structure for providers that generated incentives for unnecessary volumes of medical procedures.

Question 27

Which of the following statements concerning how health savings accounts (HSAs) are taxed is (are) correct?

I. Employer contributions are generally excluded from the employee’s gross income.

II. Contributions to an HSA made by or for a covered individual up to the maximum annual limit are deductible by the individual.

III. HSAs cannot be offered as part of a cafeteria plan.

Answer 27

I. Employer contributions are generally excluded from the employee’s gross income.

II. Contributions to an HSA made by or for a covered individual up to the maximum annual limit are deductible by the individual.

Question 28

Which of the following statements regarding the Employee Benefits Security Administration (EBSA) and the quality of plan audits is (are) correct?

I. EBSA concluded that a certified public accountant (CPA) firm’s peer review rating has little bearing on the firm’s plan audit compliance.

II. EBSA concluded that audit firms that perform a larger number of employee benefit plan audits each year tend to have a greater incidence of audit deficiencies.

III. EBSA has found numerous audit cases where no audit work was performed or there was a lack of evidence of audit work performed.

Answer 28

I. EBSA concluded that a certified public accountant (CPA) firm’s peer review rating has little bearing on the firm’s plan audit compliance.

III. EBSA has found numerous audit cases where no audit work was performed or there was a lack of evidence of audit work performed.

Question 29

Which of the following statements regarding health reimbursement arrangements (HRAs) is (are) correct?

I. Any amount not used by an employee by the end of the plan year can be carried over to the next plan year at the employer’s discretion.

II. HRAs are a popular option in cafeteria plans.

III. HRAs can be funded by employers and employees.

Answer 29

I. Any amount not used by an employee by the end of the plan year can be carried over to the next plan year at the employer’s discretion.

Question 30

Which of the following encompass (es) the definition of data analytics in the health care context?

I. It is a process of inspecting, cleaning, transforming, interpreting and modeling data.

II. Its objective is to discover trends, patterns and other information that can support benefit plan decisions and changes.

III. It strengthens the relationship between third-party payors and health care providers.

Answer 30

I. It is a process of inspecting, cleaning, transforming, interpreting and modeling data.

II. Its objective is to discover trends, patterns and other information that can support benefit plan decisions and changes..

Question 31

Which of the following categories of health care services is (are) covered under Medicare Part A?

I. Hospice care

II. Skilled nursing facility care

III. Ambulatory surgical center services

Answer 31

I. Hospice care

II. Skilled nursing facility care

Question 32

To be eligible for Social Security disability income benefits, a person must meet which of the following requirements?

I. Be disability insured

II. Satisfy a 12-month waiting period

III. Be physically, not mentally, disabled

Answer 32

I. Be disability insured

Question 33

Which of the following statements regarding cyberattacks on employee benefit plans is (are) correct?

I. Health care systems and insurers appear to be at significant risk for cyberattacks because electronic health records are particularly valuable to cybercriminals.

II. Actual security breaches of employee benefit data have been quite uncommon.

III. Security measures for health care records are often not properly implemented.

Answer 33

I. Health care systems and insurers appear to be at significant risk for cyberattacks because electronic health records are particularly valuable to cybercriminals.

III. Security measures for health care records are often not properly implemented.

Question 34

The auditor’s letter following an audit of an Employee Retirement Income Security Act plan includes which of the following?

I. Significant difficulties encountered during the audit

II. A description of the specifics testing thresholds or amounts used during the audit

III. The process management used to develop accounting estimates, including fair market value estimates, and the basis for the auditor’s conclusions as to the reasonableness of those estimates

Answer 34

I. Significant difficulties encountered during the audit

III. The process management used to develop accounting estimates, including fair market value estimates, and the basis for the auditor’s conclusions as to the reasonableness of those estimates