Module 1 Quiz

The money an employee chooses to have withheld from a payroll and transferred to the plan each pay period is referred to as a ________________.

Contribution

A ppt may withdraw money from his or her 401k account at any time as long as the ppt pays any applicable taxes. True or False

False

An employer is required to allow all those who work for the company to participate in the retirement plan. True or False

False

In order to receive an employer nonelective contribution, an employee must make a salary deferral. True or False

False

Most workers in the US are just as likely to save for retirement on their own as they are to save through an employer-sponsored plan True or False

False

A retirement plan is not in effect if the employer has not signed the plan doc. True or False

True

In order to receive an employer matching contribution, an employee must make a salary deferral. True or False

True

A ppt retires at normal retirement age. may the ppt take a distribution? a. Yes, in all qualified plans b. In some cases, if the plan allows c. No

a

An individual who works for the employer and will enter the plan upon meeting age and service requirements a. Employee b. Participant c. Potentially excluded employee

a

Angie's husband passed away. She is named as the bene on the acct. She receives periodic payments from the account for the rest of her life. What form of payment does she receive? a. Annuity b. Installment c. Lump sum d. Partial distribution

a

Juanita's comp contributes money into a retirement plan on Juanita's behalf. Juanita does not need to put any money into the plan. When she retires, the benefit she receives is a percentage of her final salary at retirement. What type of plan does Juanita have? a. Defined benefit b. Defined contribution

a

Rebecca has become eligible for her employer's 401k plan and is completing a salary reduction election form. She chooses to contribute 6% of her salary. She does not pay taxes on the amount at this time but expects to pay taxes at the time the amount is withdrawn. What type of contribution does she make? a. Pre-tax b. Roth c. After-Tax d. Rollover

a

Spring Associates is starting a retirement plan and hires an ERISA attorney to create an individually designed plan. TO have the plan pre-approved, what would they submit to the IRS? a. Plan amendment b. Adoption agreement c. Summary plan description (SPD) d. Summary of material modifications (SMM)

a

The company a ppt works for closes and terminates the plan. May the ppt take a distribution? a. Yes, in all qualified plans b. In some cases, if the plan allows c. No

a

The date an employee meets the requirements set by the plan in order to participate a. eligibility date b. entry date c. enrollment

a

Wanda is a high-level exec at her comp. Her employer contributes special stock options to a plan on her behalf based on her performance. The employer is able to target a higher amount of benefits to Wanda and other highly paid employees, but they do not receive the same tax benefits as they would through a plan under IRC 401(a). This is an example of a: a. nonqualified plan b. qualified plan

a

What is the name of the major law passed in 1974 to protect ppts in qualified plans? a. Employee Retirement Income Security Act (ERISA) b. Internal Revenues Code (IRC) c. Retirement Equity Act (REA)

a

Which of these is an employer matching contribution formula? a. 50% on the first 2% of compensation deferred b. 2.5% of compensation for all eligible employees c. $200 for each eligible employee

a

Which role calculates the amount of employer contributions? a. administrator b. advisor c. auditor d. recordkeeper

a

Which role is responsible for determining employee eligibility? a. administrator b. advisor c. auditor d. recordkeeper

a

Which role is responsible for nondiscrimination testing? a. administrator b. advisor c. auditor d. recordkeeper

a

Which of the following are required in order for a plan to maintain qualified status of an ERISA plan? (pick 3) a. Have a plan document b. Be operated according to the plan document c. Insure investments against loss of value d. File form 5500 e. Provide an annuity option for distribution of benefits

a, b, d

Which of the following are employer responsibilities? (pick 4) a. maintaining the plan for the exclusive benefit of plan ppts b. following a prudent process when hiring service providers c. advising ppts on what investments to select d. ensuring that the plan is administered according to the plan doc. e. collecting and maintaining data needed to administer the plan

a, b, d, e

Which of the following are required in all qualified retirement plans? a. A plan document b. Contributions by the employer c. Assets held in a trust d. Individual account balances

a, c

In order for the plan to remain a qualified plan, which of the following are required? (pick 2) a. The plan must pass testing each year to demonstrate that it does not discriminate in favor of highly compensated employees (HCE's) b. All employees must be eligible to participate in the plan within a year of hire c. The plan document must be amended and restated each year d. The plan must distribute notices and disclosures to ppt's and bene's

a, d

Richardson LLC offers a 401k plan to all its employees. The employer wants to make a contrib. to the plan for each employee. Which of the following are way the company may benefit from this contribution? a. Can deduct the contribution from taxes b. Can use money in 401k trust to pay off creditors c. Can target benefits solely to key execs while excluding lower paid employees d. Can use the 401k plan as a recruiting tool

a, d

Which of the following are reasons the gov allows qualified plans? (Select 3) a. To ensure the plan does not disproportionately favor higher paid employees over lower paid employees b. To ensure all employees will have retirement savings c. To simplify administration of retirement plans d. To prevent individuals from benefiting excessively from tax benefits e. To ensure that the plan is operated in the sole interest of the ppts

a, d, e

A ppt becomes disabled. May the ppt take a distribution? a. Yes, in all qualified plans b. In some cases, if the plan allows c. No

b

A ppt experiences a hardship due to a medical condition. May the ppt take a distribution? a. Yes, in all qualified plans b. In some cases, if the plan allows c. No

b

A ppt has 5 years of service with the plan. May the ppt take a distribution? a. Yes, in all qualified plans b. In some cases, if the plan allows c. No

b

A ppt has dies. May the ppt's bene take a distribution immediately? a. Yes, in all qualified plans b. In some cases, if the plan allows c. No

b

A ppt is fired. May the ppt take a distribution? a. Yes, in all qualified plans b. In some cases, if the plan allows c. No

b

A ppt would like to take a loan from the plan. May the ppt withdraw the money from the plan? a. Yes, in all qualified plans b. In some cases, if the plan allows c. No

b

An individual who has met eligibility requirements and will enter the plan upon meeting age and service requirements a. Employee b. Participant c. Potentially excluded employee

b

Angie contributes a portion of her pay to her 401k every month on a pre-tax basis. As a result, the amount of her taxable income is reduced for the current year. What is the best way to describe the tax break she receives? a. Tax credit b. Tax deferral c. Tax exemption

b

Each pay period, Chloe has 6% of her salary taken from her pay and placed in a retirement account. Every quarter, Chloe uses an online calculator to see her projected savings. She decides to increase her contribution to 7% next year. What type of plan does she have? a. Defined benefit b. Defined contribution

b

Hector is retiring and starts receiving monthly payments from his retirement plan acct. He will receive the same amount each month for ten years. What form payment does he receive? a. Annuity b. Installment c. Lump sum d. Partial distribution

b

Ling offers a retirement plan to her employees. Both Ling and her employees receive tax benefits from the plan. Because of this, the government requires her to provide adequate benefits to both highly paid and non-highly paid employees. As long as Ling follows the rules she is operating a a. nonqualified plan b. qualified plan

b

Paige is a church employee, with the option to contribute money into the church-sponsored retirement plan. What type of plan would she most likely have? a. 401k b. 403b c. 457 d. SIMPLE IRA

b

Randy contributed 3% of his salary to his employer's 401k plan each pay period. The contributions are reported as taxable income on his current year tax filing. He expects that neither the contributions nor the earnings he makes on them will be subject to taxation when he retires. What type of contribution is he making? a. Pre-tax b. Roth c. After-Tax d. Rollover

b

Sunrise Solar is working with a service provider to estab. a retirement plan. What would they use to customize the basic plan doc from their service provider? a. Plan amendment b. Adoption agreement c. Summary plan description (SPD) d. Summary of material modifications (SMM)

b

The date an employee becomes a participant a. Employee b. Participant c. Potentially excluded employee

b

Which service provider assists the employer in the process of selecting other service providers? a. administrator b. advisor c. auditor d. recordkeeper

b

Which service provider provides investment education to the employer and ppts? a. administrator b. advisor c. auditor d. recordkeeper

b

Which of the following are reasons why a person employed by a company may not be eligible for the plan? (Select 3) a. Does not make enough money b. Has not worked for the company long enough c. Is a contractor or union employee d. Is too old e. Is too young

b, c, e

A plan does not allow for loans or hardship withdrawals, but a ppt demands access to their account in order to add a room in their house. May the ppt take a distribution? a. Yes, in all qualified plans b. In some cases, if the plan allows c. No

c

An individual who works for the employer as an independent contractor, union employee, or non-resident alien. a. Employee b. Participant c. Potentially excluded employee

c

Earl is a state trooper. As a state employee he contributes money to a retirement plan through his employer and the money is tracked in an indiv. acct. balance for him. What type of plan does he most likely have? a. 401k b. 403b c. 457 d. SIMPLE IRA

c

Marc has been making contributions to his employer's 401k plan. The amount withheld from his paycheck is subject to taxation for the current year. He expects the earnings the contributions accrue will be taxed when he withdraws the money at retirement. What type of contribution is he making? a. Pre-tax b. Roth c. After-Tax d. Rollover

c

Ravi would like to sign up for his company's 401k plan. He talks to the HR director who gives him a simplified explanation of the plan, called the: a. Plan amendment b. Adoption agreement c. Summary plan description (SPD) d. Summary of material modifications (SMM)

c

Regina quit her job and has $25,000 vested in her acct. The plan allows her to transfer the money into the new plan at her new employer. In what form does she receive the payment? a. Annuity b. Installment c. Lump sum d. Partial distribution

c

The process of informing an employee of their participation in the plan, .providing them info about the plan, and collecting their info a. Employee b. Participant c. Potentially excluded employee

c

Who would be responsible for drafting an individually designed plan doc? a. administrator b. advisor c. attorney d. recordkeeper

c

Selma looks at her acct statement and sees a source of money that was transferred from the 401k plan from her previous employer. What type of contribution is this? a. Pre-tax b. Roth c. After-Tax d. Rollover

d

Which service provider offers a system to track and change investment elections? a. administrator b. advisor c. auditor d. recordkeeper

d

Which service provider tracks money as it is contributed to the plan? a. administrator b. advisor c. auditor d. recordkeeper

d