Special vesting rules apply to qualified defined contribution plans with voluntary employee contributions and matching employer contributions. Which of the following statements is (are) true with respect to these vesting rules? I. Employer contributions must vest immediately. II. Graded vesting is permitted, and employer contributions must be 20 percent vested after 2 years, with an […]
Which of the following statements about withdrawals from Section 401(k) plans is (are) true? I. The penalty tax does not apply to hardship withdrawals. II. Withdrawals may be made without penalty at age 59.5 or older. A) I only B) II only C) both I and II D) neither I nor II ANSWER […]
A financial institution that provides for the accumulation or administration of the funds that will be used to pay pension benefits is called a A) trust fund. B) mutual fund. C) funding instrument. D) funding agency. ANSWER Answer: D
Which of the following statements about trust fund plans is (are) true? I. The trustee typically purchases annuities for retiring employees. II. The trustee guarantees the adequacy of the fund to pay the promised benefits. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: […]
Which of the following statements about pension funding agencies and funding instruments is true? A) Under a trust-fund plan, individual annuities are purchased each year for employees participating in the plan. B) A separate investment account is a group pension account with a life insurance company. C) If the funding instrument is a commercial bank, […]
Which of the following statements about Section 401(k) plans is true? A) Elective salary deferrals to these plans are free of federal income taxation until the funds are actually withdrawn. B) These plans are exempt from rules that prevent discrimination in favor of highly compensated employees. C) There is no limit on the actual percentage […]
Which of the following statements concerning retirement plans for the self-employed is true? I. They can be used by owners of incorporated businesses only. II. With certain exceptions, the same rules that apply to qualified corporate plans apply to retirement plans for the self-employed. A) I only B) II only C) both I and II […]
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 concerning defined contribution pension plans is (are) true? I. The contribution rate is fixed. II. The retirement benefit varies. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: C
Which of the following is a characteristic of a health maintenance organization (HMO)? A) unlimited choice of health-care providers B) no premiums until care is provided C) narrow, limited, medical services provided D) emphasis on cost containment ANSWER Answer: D
