Module 1 Assessment

Which of the following are examples of employer matching contribution formulas? 1. 50% on the first 6% of compensation deferred 2. $100 for each eligible employee 3. 10% on the first 1% of compensation deferred 4. 100% on the first 3% deferred plus 50% on the next 2% 5. 3% of compensation for all eligible employees

1. 50% on the first 6% of compensation deferred 3. 10% on the first 1% of compensation deferred 4. 100% on the first 3% deferred plus 50% on the next 2%

Which of the following are responsibilities of the plan sponsor? (3) 1. Appointing trustee 2. Making up for lack of employee savings via employer contributions 3. Disclosing participant account balances to the spouse annually 4. Monitoring service providers 5. Appointing plan administrator

1. Appointing trustee 4. Monitoring service providers 5. Appointing plan administrator

Which of the following events may allow a plan distribution to a participant or beneficiary? (3) 1. Death 2. Disability 3. Plan amendment changing eligibility 4. Separation from service 5. Change of plan investments

1. Death 2. Disability 4. Separation from service

Which of the following events may allow a participant to take a plan distribution? (3) 1. Retirement 2. Promotion to HCE status 3. Involuntary layoff 4. Voluntary resignation 5. Becoming 100% vested

1. Retirement 3. Involuntary layoff 4. Voluntary resignation

Which of he following are requirements of maintaining qualified plan status? (3) 1. Satisfying nondiscrimination testing 2. Covering all employees 3. Allowing participants to make investment choices 4. Distributing notices and disclosures 5. Timely deposit of funds into the trust

1. Satisfying nondiscrimination testing 4. Distributing notices and disclosures 5. Timely deposit of funds into the trust

Which of the following may be advantages of an employer sponsored retirement plan? (3) 1. Tax deduction on contributions for employer 2. Saving supplement Social Security 3. Tax deferral on earnings for employees 4. Contributions by employees are mandatory

1. Tax deduction on contributions for employer 2. Saving supplement Social Security 3. Tax deferral on earnings for employees

Which of the following events may allow a participant to take a plan distribution? (2) 1. Termination of employment 2. Buying a car needed to get to work 3. Retirement 4. Addition of a plan trustee 5. Change in plan provider

1. Termination of employment 3. Retirement

Which of the following are examples of employer matching contribution formulas? 1. 5% of compensation for all eligible employees 2. 100% on the first 4% of compensation deferred 3. 25% on the first 6% of compensation deferred 4. 200% of the amount deferred for employees who deferred up to 5% of compensation 5. 1% of compensation for each 100 hours worked in the plan year

2. 100% on the first 4% of compensation deferred 3. 25% on the first 6% of compensation deferred 4. 200% of the amount deferred for employees who deferred up to 5% of compensation

Which of the following are advantages of an employer sponsored retirement plan? (2) 1. Easy to administer 2. Easy for employees to save 3. Saving supplement Social Security 4. Limited government regulations apply

2. Easy for employees to save 3. Saving supplement Social Security

Which of the following statements best describes a defined contribution plan? 1. It is a plan in which the employer bears risk of investment gains/loses 2. It is made of induvial accounts 3. It guarantees an induvial a minimum at retirement 4. It is more expensive to administer that a defined benefit plan

2. It is made of induvial accounts

Derek has just met his eligibility requirements and wants to enroll in his employer's 401(k) plan. Which of the following documents are routinely given to newly eligible participants? (2) 1. Basic Plan Document 2. Summary Plan Description 3. Determination Letter 4. Beneficiary Designation Form

2. Summary Plan Description 4. Beneficiary Designation Form

Which of the following occur when a plan is set up? (4) 1. Affected participants automatically become 100% vested. 2. The plan document is adopted. 3.. Participants are notified. 4. A trust is set up to hold the assets. 5. Participants are enrolled in the plan.

2. The plan document is adopted. 3.. Participants are notified. 4. A trust is set up to hold the assets. 5. Participants are enrolled in the plan.

Who prepares the Form 5500?

Administrator

Which type of plan has a pre-determined benefit for participants at retirement?

Defined benefit

Louise receives 1/10 of her vested account balance each year for 10 years following her early retirement. Which form of payment does she receive?

Installment

Why does the government regulate retirement plans?

It prevents discrimination by employers in the private retirement plan system

Which term best describes who is responsible for operating and administering a qualified plan under ERISA?

Named Fiduciary

Joseph takes a distribution of 20% of his vested account balance the year after he retires and nothing the following year. Which form of payment does he receive?

Partial distibution

Josephine is a participant in a 401(k) plan with 25 different investment options. She is able to select where her contributions are invested and may make transfers daily. What tern best describes the type of investment direction?

Participant-directed

Olga is a participant in her employer's 401(k) plan. She makes elective deferrals each pay period. She expects that her elective deferrals and the earnings on those deferrals will be subject to taxation when she takes a withdraw from her account in 25 years when she retires. Linda makes a:

Pre-tax deferral

Luke completes a form and his 401(k) balance from his previous employer is transferred to his account at the dealership. Luke makes a:

Rollover contribution

Linda is a participant in her employer's 401(k) plan. She makes elective deferrals each pay period. Her elective deferrals are taxable to her in the current year but she expects that the earnings on those deferrals are never subject to taxation if she satisfies certain requirements. Linda makes a:

Roth contribution

Which document is intended to provide an explanation of the plan provisions to employees?

Summary Plan Description

Andrea saves from her paycheck now into the 401 (k) plan knowing she will pay taxes on the amount later when she withdraws it in retirement. What term best describes the tax benefit she receives?

Tax deferral

Why does the government require nondiscrimination testing?

To ensure a minimum level of benefit is available to NHCEs