L/A/H Insurance . C9.Qualified Plans, Group Life Insurance, and Social Security . Questions

Who is most likely to participate in a 401(k) plan? A. An employee of a non-profit company B. A public school teacher C. A state employee D. An employee of a for-profit company

D

Who may participate in a 403(b)/Tax-Sheltered Annuity plan? A. A public teacher B. A minister C. A nurse D. All the above

D

Which of the following plans does not require that the owner begin to make minimum distributions prior to age 70 1/2? A. Roth IRA B. SEP C. 401(k) Plan D. SIMPLE Plan

A

Which of the following is not a qualified plan? A. 401(k) Plan B. Simplified Employee Pension Plan C. Individual Life Insurance Policy D. Section 457 Deferred Compensation Plan

D

A group life insurance plan provides term life insurance protection. If an employer pays the entire premium, what percentage of the eligible employees must be covered by the plan? A. 75% B. 50% C. 90% D. 100%

D If a group life plan is noncontributory, all eligible employees (100%) must be covered.

Pre-Tax Contributions are used to fun which of the following programs? A. 403(b) B. 501(c) - 3 C. Roth IRA D. 529 college savings program

A

Which of the following plans allows the owner to continue making contributions beyond age 70 1/2 and does not require that the owner begin to make minimum distributions prior to age 70 1/2? A. Roth IRA B. SEP C. A traditional IRA D. SIMPLE plan

A

Each of the following are characteristics if a Roth IRA, EXCEPT: A. Distributions may be deferred beyond age 70 1/2 B. Contributions to this account are tax-deductible C. Contributions may continue after age 70 1/2 D. Qualified distributions are not income taxable.

B

To avoid any penalties or adverse tax consequences, rollovers of qualified plans must be effected within how many months of withdrawals? A. 1 month B. 2 months C. 3 months D. 4 months

B

Which of the following is true regarding group life insurance? A. Benefits paid to a beneficiary are taxable B. An employee with a previous physical impairment is eligible for group life insurance C. Group life insurance is not portable D. Group life policies include a savings feature which permits policy loans

B

All of the following plans are qualified, EXCEPT a: A. 401(k) plan B. Simplified Employee Pension (SEP) C. Deferred Compensation plan D. Section 457 Deferred Compensation plan

C

Social Security provides all the following types of benefits EXCEPT: A. Disability B. Death C. Workers' Compensation D. Retirement

C

Social security provides several types of benefits to those who are eligible. One of these benefits is retirement income. If an eligible recipient is fully insured, which of the following statements is true? A. A lump sum benefit of $255 will be paid to an eligible dependent child when the eligible worker dies B. The primary insurance amount will be paid to an eligible recipient at retirement C. A recipient may receive monthly income benefits at age 65 and continue to work D. Income benefits may begin during the blackout period if the eligible spouse is over age 60

C

Under a group life insurance policy, an insured is provided as a tax-free benefit up to what coverage amount? A. $20,000 B. $25,000 C. $50,000 D. $100,000

C

Which statement below is NOT TRUE with regard to a Roth IRA? A. The owner may contribute beyond age 70 1/2. B. There is no minimum distribution requirement at age 70 1/2. C. Distributions are tax-free if withdrawn after age 59 1/2. D. Distributions are tax-free if withdrawn after age 59 1/2 and the account has been open for 5 or more years.

C

Income requirements or limitations are not a consideration when establishing which savings vehicle listed below? A. Traditional IRA B. Roth IRA C. 401(k) D. Fixed or Variable Annuity

D

Mack is a full-time college student and a part-time pizza delivery man. He earns no more than $1,500 per year. What is the maximum contribution Mack could make into his IRA retirement plan? A. $4,000 B. $4,500 C. College students may not open IRA accounts. D. $1,500

D

Qualified plan "rollovers" from one qualified plan to another must occur within ____ days of the original withdrawal or penalties will be assessed. A. 10 B. 15 C. 30 D. 60

D

Tax advantages of a qualified plan would include all of the following, EXCEPT: A. Employer contributions are deductible to the employer as a business expense B. Plans grow on a tax-deferred basis C. Benefits are not taxed until withdrawn D. All the above are true advantages.

D

What is the lump sum death benefit amount payable from Social Security? A. $15,000 B. $1,500 C. $155 D. $255

D

Which of the following may be used to fund an individual retirement account? A. whole life policy B. life paid-up at age 65 policy C. universal life policy D. flexible premium annuity

D

Which of the following statements is FALSE when discussing an individual retirement account (IRA)? A. it is a retirement plan for those who have earned income B. Many IRAs are used to fund retirement C. Growth is tax-deferred until withdrawn D. Only the growth of the account is taxable when withdrawn.

D

Which of the following plans is used to fund college savings? A. 529 Plan B. 403(a) plan C. Rule of 72 Plan D. 401(k) Plan

A

Group and individual underwritings vary greatly. Which statement below is NOT TRUE with regard to group insurance and/or its underwriting practices? A. Group underwriting is more liberal than individual underwriting. B. Medical exam requirements are required for group participation. C. The Master Contract goes to the employer who owns the policy. D. Group rates are generally less expensive than individual rates

B

Pre-retirement pension plan distributions may occur prior to age 59 1/2. What penalty amount may be assessed for an early distribution? A. 5% B. 10% C. 15% D. 25%

B

Which type of contract below can be used to fund an individual retirement account? A. A variable life policy B. a flexible premium annuity C. a level term policy D. a modified whole life policy

B

A tax-sheltered annuity is characterized by a salary reduction and tax deferral. Which of the following would be eligible to participate in this type of retirement vehicle? A. 58-year-old male who is totally disable B. an administrative assistant to a company offer C. a minister D. an employee of the federal government

C

All of the following are situations whereby the owner of a qualified plan would be able to receive a penalty free or qualified distribution of funds prior to age 59 1/2 EXCEPT: A. The death of the owner. B. The disability of the owner. C. Using the money for start-up capital for a new multilevel marketing company. D. Buying a home for the first time.

C

Assuming the owner of a Roth IRA is at least age 59 1/2, how are withdrawals taxed, if at all? A. Tax Free withdrawals B. Taxed as ordinary Income C. Tax Free, but only if used to purchase a first time home. D. Tax Free, but only if used to fund college expenses.

C

In a contributory group life insurance plan, what portion of eligible employees must participate before a policy is issued? A. 25% B. 50% C. 75% D. 90%

C

In order to receive the IRS status "qualified", a retirement plan must meet all the following conditions, EXCEPT: A. it must be in writing B. It must not be discriminatory C. It must comply with the exclusion ratio formulas D. It must satisfy minimum age and service standards

C

Qualified plans are those that are approved by the IRS. In order to receive qualified status, the plan must meet all of the following conditions, EXCEPT: A. They must be in writing. B. They must not be discriminatory. C. They must comply with the exclusion ratio formula. D. They must satisfy minimum age and service standards.

C

The owner or beneficiary of a qualified plan would be able to receive a penalty free distribution of funds prior to age 59 1/2 in all the following examples EXCEPT: A. The owner dies B. The owner becomes disabled C. The owner needs start up capital for new multilevel marketing company. D. The owner uses funds to purchase a first time home.

C

Who would be most likely to purchase a Keogh qualified retirement plan? A. A political legislator B. A state employee C. A self-employed person or sole proprietor D. A teacher

C

A qualified plan describes any pension or profit-sharing plan that provides favorable tax treatment. All of the following are requirements of a qualified plan, EXCEPT: A. It must be in writing. B. It must be communicated to all employees. C. It must provide Social Security retirement income benefits. D. It must be provided for the exclusive benefit of employees and their beneficiaries.

C Qualified plans are not connected with nor do they provide benefits for Social Security.

Which of the following types of pension plans do not permit a tax deduction of contributions to the plan? A. Defined benefit plan B. Qualified plan C. Defined contribution plan D. Non-Qualified plan

D

Each of the following may be used to fund an individual retirement account? A. Whole life policy B. Life paid-up at age 65 policy C. Universal life policy D. Flexible premium annuity

D

Each of the following is a social security benefit, EXCEPT: A. Disability benefits B. Unemployment Benefits C. Retirement Income D. Dependent Benefits

B

A 529 College savings plan is primarily designed to save money to pay for college and post-secondary educational expense. What are the tax implications for the earnings credited to this type of plan when withdrawn to pay for these post-secondary expenses? A. Tax deductible B. Taxable C. Tax Free D. Tax Deferred, but taxable upon withdrawal

C

A keogh plan would most likely be purchased by: A. a state policeman B. A state senator C. a self-employed person/sole proprietor D. a college professor

C

A tax-sheltered annuity provides reduced tax liability by means of a salary reduction. All of the following are eligible to participate in a 403(b) tax-sheltered annuity, EXCEPT: A. private school teach B. minister C. employee of a town D. employee of non-profit agency

C

Group insurance may be sold to each of the following entities except: A. Employer groups B. Unions C. Self-employed individuals D. Trade associations

C A self-employed individual is not a group and cannot be sold group insurance and become a policyowner. An individual who works within any one of these organizations may participate in the group plan, but technically does not own the plan.

A 401(k) plan would be the retirement tool used by: A. employee of a nonprofit company B. public school teacher C. state employee D. employee for a for profit company

D

A qualified plan owner, age 45, decides to withdraw, not transfer monies from his retirement plan. What penalties, if any will be assessed? A. A 10% IRS penalty B. Applicable state and federal withholding taxes C. Neither A nor B D. Both A and B

D

Which of the following statements is TRUE regarding group life insurance? A. The underwriting practices are more liberal than individual B. The employer receives certificate of coverage C. employer-paid premiums are not deductible to the employer D. Ordinary whole life is the most common group life insurance product offered.

A

A Keogh Plan is designed for which of the following parties? A. High salaried directors of a corporation B. A sole proprietor and employees C. Partners with a business interest in excess of $500,000 D. An employee of a nonprofit organization

B

A direct rollover made from one qualified plan to another without the owner receiving any cash is: A. Subject to the 20% withholding tax B. Not Subject to the 20% withholding tax C. Subject to a withholding tax if not effected within thirty days of the rollover D. Subject to a penalty unless completed within one year

B

Which of the following best describes a type of pension plan where contributions to it are not tax-deductible? A. Defined contribution plan B. Tax-qualified plan C. Non-qualified plan D. Defined benefit plan

C

Which of the following best describes a type of retirement plan whereby contributions to the plan are not tax-deductible? A. Defined contribution plan B. Tax-Qualified plan C. Non-Qualified Plan D. Defined Benefit Plan

C

Which pairing is NOT CORRECT? A. 403(b) -- non-profit employee B. 401(k) -- for-profit employee C. 457 Deferred Compensation -- municipal worker D. IRA -- self-employed only

D

Which pairing is NOT CORRECT? A.401(k) - for profit employee B. 403(b) - non-profit employee C. 457 Deferred Compensation - municipal employee D. IRA - Self Employed Only

D

Which statement is not true with regard to a Thrift Savings Plan? A. They involve pre-tax voluntary contributions from the employee. B. Accumulated values grow on a tax-deferred basis. C. The function very much like a 401(k) D. they are not regulated and have no plan oversight.

D

If an employer pays the entire premium of a group insurance plan, what percentage of the eligible employees must be covered by this non-contributory plan? A. 75% B. 50% C. 90% D. 100%

D

Social Security provides several benefits based on a worker's Primary Insurance Amount. Each of the following is a Social Security benefit, EXCEPT: A. Disability benefits B. Unemployment benefits C. Retirement income D. Dependent benefits

B

All of the following are requirements of a qualified plan, EXCEPT: A. The plan must be in writing B. The plan must be communicated to all employees C. The plan must provide social security retirement income benefits D. The plan must be provided for the exclusive benefit of employees and their beneficiaries.

C

Which of the following qualified plans is specifically used to set aside funds for a college or post secondary education? A. 529 plan B. 403(a) plan C. Rule of 72 plan D. 401(k) plan

A

If an individual only earns $800 in a calendar year, what is the maximum IRA contribution he could make? A. $2,000 B. $2,500 C. $4,000 D. $800

D

What does an employee not have to prove or provide when she wishes to convert her group term plan to an individual plan? A. The ability to pay the premium. B. Verification of new employment. C. The reason for conversion. D. Insurability

D

What is the name of the voluntary retirement plan that is available for federal employees? A. 401(k) B. 403(b) C. Defined Benefit plan D. Thrift Savings Plan

D

Which of the following is not a qualified plan? A. 457 plan B. 401(k) plan C. 403(b) plan D. Endowment

D

An employee's length of service and an average of their yearly income are two important factors when calculating the retirement benefit for which plan listed on the right? A. Defined benefit plan B. Defined Employment plan C. Defined Simple Plan D. Defined Contribution Plan

A

An employee's length of service and an average of his yearly income are two important factors when calculating the retirement benefit of a: A. Defined Benefit plan B. Defined Employment plan C. Defined Simple plan D. Defined Contribution plan

A

Which of the following statements is TRUE regarding group life insurance? A. The underwriting practices are more liberal than individual insurance. B. The employer receives the certificate of coverage. C. Employer-paid premiums are not deductible to the employer. D. Ordinary whole life is the most common group life insurance product offered.

A

When an employee terminates employment she may choose to take her group life insurance coverage with her according to the conversion privilege. Generally, the insurer allowing the conversion will require the employee to convert to which of the following types of life insurance? A. individual term life insurance B. individual whole life insurance C. group permanent life insurance D. group term life insurance

B

Which type of contract may be used to fund an individual retirement account? A. A Variable life policy B. A Flexible Premium Annuity C. A Level Term policy D. A Modified Whole Life policy

B

Social security provides all the following types of benefits, EXCEPT: A. Disability Benefit B. Death benefit C. Workers Compensation Benefit D. Retirement Benefit

C

Which of the following qualified plans is more inclined to utilize a fixed or variable deferred annuity as its primary investment vehicle? A. An individual retirement account B. group term life insurance plan C. Section 457 Plan D. buy-sell agreement

C

Which of the following statements is FALSE regarding group conversion? A. Dependent children covered under the group plan may also convert to an individual plan. B. All group plans must offer the conversion right. C. Conversion consists of a 20-day period following termination D. Proof of insurability is not required

C

Which of the following statements is FALSE with regard to a Roth IRA? A. The owner can contribute beyond age 70 1/2 B. There is no minimum distribution requirement at age 70 1/2 C. Distributions are tax-free if withdrawn after age 59 1/2 D. Distributions are tax-free if withdrawn after age 59 1/2 and the account has been open for 5 or more years.

C

Which statement below is NOT TRUE with regard to group conversion? A. Dependent children covered under the group plan may also convert to an individual plan. B. All group plans must offer the conversion right. C. Conversion consists of a 30-day period following termination. D. Proof of insurability is not usually required.

C

A qualified plan owner, age 45, decides to withdraw, not transfer monies from his retirement plan. Which of the following choices best describes the possible penalties that may be assessed? A. A 10% IRS penalty B. Applicable state and federal taxes will be withheld C. There are no penalties D. A 10% IRS penalty, plust state and federal taxes would be withheld.

D

An employee moves money from one qualified plan to another. In order to avoid tax penalties, within what period must the money be moved and what is the process called? A. 30 days, a transfer B. 60 days, a transfer C. 30 days, a rollover D. 60 days, a rollover

D

Each of the following is a true tax advantage of a qualified plan except: A. Employer contributions are deductible to the employer as a business expense. B. Plans grow on a tax-deferred basis. C. Benefits are not taxed until withdrawn. D. All the above are true advantages.

D

Establishing a 529 College Savings Plan is based upon which of the following factors, if any? A. The size of the family B. The gross income of the family C. The educational background of the parents D. none of the above

D

The following statements are true of an Individual Retirement Account (IRA), EXCEPT: A. It is a retirement plan for those who have earned income. B. Most IRAs are used to fund retirement. C. Growth is tax-deferred until withdrawn. D. Only the growth of the account is taxable when withdrawn.

D

What does an employee NOT have to prove or provide when they wish to convert their group plan to an individual plan? A. Premium Payment B. Verification of Termination C. Name of insured or dependents wishing to convert D. Insurability

D