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 about SIMPLE retirement plans is true? A) They are limited to employers with 100 or fewer eligible employees and who do not maintain another qualified plan. B) Employees are not permitted to make SIMPLE plan contributions. C) Employers are subject to more stringent nondiscrimination rules than those that apply to […]
Which of the following statements is (are) true with respect to vesting under a qualified retirement plan? I. Vesting helps to reduce labor turnover. II. An employee who terminates employment after four years of service has no vested retirement benefit under cliff vesting. A) I only B) II only C) both I and II D) […]
