ins 454 final

24. Which of the following statements comparing a non-qualified plan with a qualified plan is (are) correct?

- A non-qualified plan is more effective in helping an employer to retain key employees than a qualified plan.

26. All of the following statements concerning defined-benefit formulas are correct EXCEPT

- Flat-amount formulas can be used to legally discriminate in favor of highly compensated employees

38. Which of the following statements correctly describe(s) the advantages of a guaranteed-investment contract (GIC)? (A) I only (B) II only (C) Both I and II (D) Neither I nor II

(B) II only

36. Which of the following statements concerning a Summary Material Modification is correct?

(B) It explains the changes that have occurred to the summary plan description within the last year

33. Which of the following statements regarding fiduciary responsibility is correct?

(B) The "exclusive benefit rule" requires that fiduciaries discharge their duties solely in the interest of the plan's participants and beneficiaries, for the exclusive purpose of providing benefits and defraying reasonable expenses.

41. Which of the following statements regarding investment guidelines is (are) correct? I. Investment guidelines help fiduciaries to perform their duties by providing clear procedures for the fiduciary to follow. II. Establishing clear investment guidelines can offer significant protection for the fiduciary whose actions are questioned.

(C) Both I and II

45. All of the following statements concerning qualified plan death benefits are correct, EXCEPT

(D) A plan cannot contain any form of death benefit if it is determined to be top-heavy.

43. All of the following could be permitted as eligibility requirements for a qualified pension plan, EXCEPT

(D) All employees are covered upon reaching age 21 and completing 4 years of service.

39. Which of the following statements concerning the prohibited transactions rules is (are) correct?

(D) Neither I nor II

42. Which of the following statements regarding investment guidelines is (are) correct? I. Investment guidelines should be reviewed every 5 years. II. The primary investment objective in a defined-benefit plan is to minimize the long-term cost of the plan.

(D) Neither I nor II

46. All of the following statements concerning qualified plan loans are correct, EXCEPT

(D) Plans often allow participant loans to be repaid interest free.

4. The maximum monthly benefit that the PBGC will pay to a plan participant if the plan cannot meet its benefit promise is approximately:

$5011.46

44. The notice to interested parties of the employer's intent to install a qualified pension plan should contain all of the following, EXCEPT

(A) A detailed explanation of the proposed plan

40. Which of the following statements concerning IRA rollovers is (are) correct?

(A) I only

35. Which of the following products should be marketed to a defined-benefit plan that is terminating?

(A) single-premium annuity contracts

34. The Gautreaux Grommet Company has a qualified money-purchase pension plan that allows participant loans up to the maximum legal limit. Clarence, an employee of the company, is a participant in the plan with a $240,000 vested account balance. Assuming Clarence had no previous loans with the plan, what is the maximum loan he can take from the plan?

(B) $50,000

37. Which of the following vesting schedules may be applied to employer contributions in a qualified plan? Assume that the plan is not top-heavy.

(B) II only

21. Which of the following statements concerning 401 (k) salary deferral plans is (are) correct?

- In 2013 the maximum salary deferral for a 55 year old participant is $23,600 - In 2013 the maximum salary deferral for a 45 year old participant is $15,500

22. Which of the following statements concerning cross-tested and age-weighted defined-contribution plans is (are) correct?

- In a cross-tested plan, contributions allocated to participants are tested for non-discrimination by first converting the contributions to equivalent benefit accruals. - An age-weighted plan is a type of cross-tested plan that allocates the amount necessary that all participants receive the same benefit accrual (as a percentage of salary.)

18. Which of the following statements concerning information sources for the pension practitioner is (are) correct?

- Loose-leaf services provide up-to-date information about laws, plans, and related areas.

13. Tax advantages of a qualified plan include which of the following?

- Neither

14. Which of the following statements concerning benefit formulas is (are) correct?

- Neither

23. Which of the following statements concerning reasons for obtaining an advance determination letter for a qualified plan is (are) correct?

- Neither

12. Which of the following statements correctly concerning Top Heavy Requirements is (or) correct?

- Plan is top heavy when most of money in the plan belongs to highly compensated employees

2. Which of the following statements concerning contributions to a SIMPLE is correct?

- The employer cannot place any restriction on participant withdrawals. Bc its going into an IRA

15. Which of the following statements concerning post-ERISA legislative changes that have an effect on retirement planning is (are) true?

- The laws have been changed so that today corporations and self-employed individuals have virtually the same opportunities (with few, minor exceptions) under the pension rules.

7. As far as profit-sharing plans are concerned, the IRS will recognize an involuntary termination under which of the following circumstances?

- The plan contributions are not substantial and recurring

10. Which of the following statements correctly describes a simplified employee pension (SEP) plan?

- The plan must provide for immediate and full vesting.

25. All of the following statements comparing a target-benefit plan to a defined- benefit plan are correct, EXCEPT

- The target-benefit plan allows older, highly compensated owner-employees to save more than they could save under a defined-benefit plan.

11. Which of the following factors is likely to be most important in choosing a qualified plan for a small employer?

- The use of the plan as a tax shelter for key shareholder-employees.

9. Which of the following statements concerning money-purchase pension plans is correct?

- They must contain a specified contribution formula.

29. The Employee Retirement Income Security Act (ERISA) established all of the following, EXCEPT

- Top-Heavy Requirements

3. Which of the following statements concerning employee contributions to an employer sponsored a 401 (k) plan is correct?

- Voluntary employee salary deferrals must satisfy a non-discrimination test.

28. All of the following are defined-contribution plans, EXCEPT

- a pension plan providing a benefit of $100 per month at retirement.

27. All of the following statements concerning post-ERISA pension law changes that have an effect on pension plans are correct EXCEPT

- the most recent tax law drastically reduced the maximum amount that can be contributed for any single plan participant.

30. An employee exercises nonqualified stock options with an option price of $7.50 per share and a market price of $22.00 per share. How much ordinary income does the individual have for each share at the time of the exercise?

-$22.00-$7.50=$14.50

17. Which of the following statements concerning the coverage requirements that apply to qualified plans is (are) correct?

-THE ANSWER IS C

19. Which of the following statements concerning 401 (k) plans is (are) correct?

A 401(k) plan can allow for salary deferral contributions, employer matching contributions, and employer profit-sharing contributions.

49. Which types of contributions can be subject to a 6 year vesting schedule?

401(k) matching contributions from the company and or profit sharing contributions

1. Which of the following statements concerning Sec. 423 employee stock purchase plans is correct?

Allows employees to purchase stock with after-tax money at a discount of up to 15%.

20. Which of the following statements comparing qualified plans with non-qualified plans is (are) correct?

Nonqualified plans generally are considered to be more effective than qualified plans for recruiting, retaining, and retiring executives. - Fewer formalities are required to establish a nonqualified plan than are required to establish a qualified plan.

50. Loans are permitted from which types of plans?

Profit-sharing, money purchase, 401(k), 403(b) and 457(b) plans

31. Which of the following statements concerning a stock option program is correct?

Program where employer give employees options to buy stock at future price at a later date even if the stock has risen in market price

5. The Arceneaux International Group (AIG) recently adopted a qualified money-purchase plan. The census of eligible employees for the plan is as follows:

Should be 4 of them Pick highly compensated (120,000 or owns 5% of company stock)

8. Which of the following documents must be provided automatically to all participants in a qualified plan?

Summary plan description

6.. Which of the following statements describes a disadvantage of a target-benefit plan, as opposed to a defined-benefit plan?

The target plan is a defined-contribution plan and annual contributions are limited to the lesser of $51,000 or 100% of compensation.

32. Jason Leger, age 55 is considering the establishment of an individual retirement account (IRA). He is not employed in 2013, but has investment income of $85,000. His maximum tax-deductible contribution to an IRA for 2016 will be:

ZERO

47. Separate Investment Accounts can invest in .............

individual stocks, bonds and commodities

48. Qualified Plans should take advantage of tax-free investments, such as.....??

qualified plans grow tax deferred so it would be unnecessary to invest in a tax free investment

16. Which of the following statements is (are) true about 403 (b) plans?

tax-sheltered annuity (TSA) plan, is a retirement plan for certain employees of public schools, employees of certain tax-exempt organizations, and certain ministers.