Finance

ACME Company is considering starting a retirement plan for its employe

ACME Company is considering starting a retirement plan for its employees. One option ACME is considering is a profit-sharing plan. All of the following are advantages of this type of retirement plan EXCEPT A) The employer’s cost is not affected by the age and the number of employees. B) Profit sharing plans provide an incentive […]

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Date: September 19th, 2020

) Which of the following distributions from a qualified retirement pla

) Which of the following distributions from a qualified retirement plan would be exempt from the 10 percent penalty tax if the distribution occurred before the covered employee was age 59.5? I. A distribution made to an employee with a qualifying disability. II. A distribution made to a beneficiary or to the employee estate’s after […]

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Date: September 19th, 2020

Special vesting rules apply to qualified defined contribution plans wi

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 […]

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Date: September 19th, 2020

Which of the following statements about trust fund plans is (are) true

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: […]

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Date: September 19th, 2020

Which of the following statements about pension funding agencies and f

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, […]

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Date: September 19th, 2020

Which of the following statements about Section 401(k) plans is true?

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 […]

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Date: September 19th, 2020

Beta Corporation has 1,000 employees eligible to participate in the fi

Beta Corporation has 1,000 employees eligible to participate in the firm’s pension plan, and 100 of these employees are considered highly compensated. All of the highly compensated employees are covered by the plan. What is the minimum number of the 900 non-highly compensated employees who must be covered by the plan in order for the […]

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Date: September 19th, 2020