All the following statements concerning a Roth 401(k) plan are true EXCEPT A) After-tax dollars are used to fund the plan. B) Investment earnings accumulate on a tax-free basis. C) Employees at all income levels may contribute to the plan, but annual contributions are limited. D) Qualified distributions at retirement are fully taxable. […]
The tax credit available through the Saver’s Credit is equal to A) the annual IRA contribution limit. B) $2,000 regardless of income level and tax-filing status. C) a percentage of the contribution made to a traditional IRA, Roth IRA, 401-k, SIMPLE plan, or 403(b) plan. D) one-fourth of the Social Security taxes paid by the […]
JKL Company just converted its traditional defined-benefit plan to another type of plan. Under the plan, benefits are defined in terms of a hypothetical account balance, with retirement benefits dependent upon the value of the participant’s account at retirement. Each year, employees receive an interest rate credit and a pay credit which is a specified […]
Which of the following is a reason that social insurance programs exist? A) to compete with private insurance programs B) to provide a base of economic security C) to provide needs-tested benefits to low-income individuals D) to reduce involvement of the government in insurance markets ANSWER Answer: B
All of the following statements about 403(b) plans are true EXCEPT A) Contributions to a 403(b) reduce an employee’s taxable income. B) 403(b) plans are designed for employees of public school systems and tax-exempt organizations. C) The law limits the amount of income that an employee can elect to defer under a 403(b) plan. D) […]
Which of the following statements about Roth 401(k) plans is true? I. Contributions to a Roth 401(k) plan are made with before-tax dollars. II. Qualified distributions from a Roth 401(k) are received income-tax free. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: B
Which of the following statements is (are) true with respect to profit-sharing plans? I. There is no limit on the amount that an employer can contribute annually to an employee’s account under a profit sharing plan. II. Profit sharing plans offer greater funding flexibility for employers than under other qualified plans. A) I only B) […]
Lynn works for a state university. In addition to the university’s regular retirement plan, Lynn participates in another retirement savings plan. She elected to have $5,000 of her salary withheld and contributed to a tax-sheltered annuity with an insurer. The type of plan that Lynn established is called a A) SIMPLE plan. B) 403(b) plan. […]
Which of the following statements concerning defined benefit and defined contribution pension plans is (are) true? I. The employer bears the investment risk with a defined contribution plan. II. Defined benefit plans favor workers who enter the plan at older ages. A) I only B) II only C) both I and II D) neither I […]
In the context of employee benefits, the term “discrimination” refers to benefit comparisons between A) male and female employees. B) current employees and retirees. C) highly compensated employees and non-highly compensated employees. D) members of an under-represented group (by religious preference, race, or national origin) and the majority of employees. ANSWER Answer: C
