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Which of the following are sources of statutory law in regards to qualified plans?

All of the above

Retirement plans can help organizations meet their goals by:

All of the above are correct.

Defined-contribution pension plans include which of the following? I. Target-benefit plans II. Money-purchase plans

Both I and II

Employer contributions to Qualified Retirement plans are: I. immediately deductible to employer. II. tax deferred to employee.

Both I and II

Which one of the following is NOT an example of a defined-contribution plan?

Cash-balance pension plan

Check all that apply to Defined benefit plans:

Employee contributions neither permitted nor required, An actuary is required to calculate contributions and to assist in benefit calculations; usually requires distributions only at retirement; forefeitures by non-vested participants are not tracked in individual accounts.

Defined-contribution plans tend to be more costly administratively because of more complex rules and the requirement of actuarial statements

False, defined -benefit contribution plan

Stock bonus plans fund primarily in the form of mutual funds

False, stock of the employer

Which of the following is a characteristic of defined contribution plans?

Individual accounts

Which of the following statements are true?

The average cost of retirement benefits is less than 7% of payroll

A pension plan is designed primarily to provide adequate retirement benefits to covered employees and emphasizes definitely determinable benefits and deferral of payment to retirement

True

A profit-sharing plan provides benefits that are less certain and may even be completely discretionary on the employer's part (although they must be allocated in a nondiscriminatory way).

True

Depending on how they are designed, retirement plans can be targeted to increase or decrease turnover in certain types of workers.

True

Employer contributions to the plan and plan earnings are not subject to payroll taxes such as Federal Insurance Contributions Act (FICA) and Federal Unemployment Tax (FUTA).

True

One reason that an employee might not appreciate their retirement plan is because employees believe they will not stay at the organization long enough to vest in benefits.

True

Only a defined-benefit plan needs an actuary on an ongoing basis.

True

Qualified plans must have non-forfeiture provisions

True

Qualified plans require funding in advance of payment.

True

Retirement plans can help attract and retain the type of work force needed to help businesses achieve their objectives.

True

Retirement plans can help increase current productivity

True

Stock bonus plans are a form of profit-sharing plans

True

Treasury regulations are binding on all taxpayers.

True

When a former employee begins to receive benefits, the taxes paid on the benefits may be lower because the retiree is likely to be in a lower tax bracket.

True

All the following are reasons to recommend that an employer adopt a qualified retirement plan EXCEPT:

small employers (employers with less than 25 employees) can cut costs by designing the plan to exclude employees who are under age 25 and who have less than three years of service.

The tax benefits of a qualified plan are:

the employer gets a tax deduction; employee's contribution is tax deferred.

An actuary is used for which type of plan?

Defined benefit plans

A qualified profit-sharing plan is similar to a qualified money-purchase pension plan in which of the following respects?

Employer contributions are tax deductible.

Employees must pay a minimal tax when the employer first makes a contribution

False

Employees only pay for interest income to employer contributions but on employer contributions themselves.

False

Employer contributions to qualified retirement plans are taxed immediately but future earnings on contributions are not

False

In a defined-benefit plan, the employee bears the risk of bad investments of the plan.

False

After age 70 1/2, an employee can no longer defer income through a qualified retirement plan.

False (can continue to defer but must take minimum payouts)

Only defined-benefit plans provide individual account balances for participants.

False, Defined-contribution plan

Revenue rulings only apply to the individual taxpayer in question.

False, are interpretations of tax law in specific fact situations that are published by the IRS and are binding on other taxpayers where the same set of relevant facts exists.

Employees never pay tax on retirement plan income.

False, employers

Management objectives in pension plan design include which of the following?

Help employees with retirement savings.

Sources of tax law binding all taxpayers include: I. Treasury regulations II. IRS private-letter rulings

I only

Which one of the following is a respective regulatory role of Treasury Regulations, IRS Revenue Rulings, and IRS Private Letter Rulings?

Private letter rulings are applied for, to the IRS by private taxpayers.

A taxpayer wishing to contest a tax assessment has three choices. Which of the following is not one of those three choices?

Small Claims Court

A qualified plan can cover any of the following EXCEPT:

a private contractor doing work for the sponsoring company.

A 401(k) plan:

allows employees to choose to receive compensation as cash or as a contribution to a qualified profit sharing plan.

A major federal tax advantage of a qualified plan is

earnings on plan funds accumulate tax-free.

All of the following are basic objectives of pension plan design EXCEPT:

encourage formation of a collective bargaining unit.

All of the following are characteristics of a qualified plan EXCEPT?

funding after employee retirement.

The federal government encourages the adoption of qualified retirement programs for all the following reasons EXCEPT to:

provide a tax-sheltered savings program for owners of small businesses.

Qualified retirement plans have the following tax advantages EXCEPT:

the employee is taxed at the time the employer makes contributions for the employee.