2024 – Exam 412759RR Planning for Retirement 1 Matrix Insurance holds the assets of Stream

Exam: 412759RR Planning for Retirement

1. Matrix Insurance holds the assets of Stream Corporation’s qualified retirement plan in a separate account. What is the most likely reason that Matrix would do so?

A. Matrix Insurance and Stream Corporation are partners.

B. Matrix Insurance is a funding agency.

C. Stream Corporation is a whole-life contract provider.

D. Stream Corporation doesn’t have a stable benefit disbursement history.

 

2. If an individual wishes to appeal a tax assessment made by the IRS, what advantage does this individual have in taking the case to the U.S. Tax Court?

A. The U.S. Tax Court is the only court that can overrule regulations of the IRS.

B. The U.S. Tax Court is the final court of appeal for tax cases.

C. The U.S. Tax Court has more authority than the Federal District Court or the U.S. Claims Court.

D. The individual doesn’t have to pay the disputed tax before taking the case to court.

 

3. A major cause for the establishment of the Social Security system was the

A. Vietnam War.

B. Revenue Act of 1926.

C. Great Depression.

D. Revenue Act of 1921.

 

4. Which one of the following statements about contributory pension plans is most accurate?

A. Employees appreciate their benefit plans more when they contribute to benefit funding.

B. The least favorable contributory plan involves salary reduction.

C. Contributory plans give employees some degree of choice in allocating their compensation between cash and deferred benefits.

D. The contributory approach lowers the cost of pension benefit plans.

 

5. For all practical purposes, the primary source of significant regulations regarding employee benefits is the

A. Internal Revenue Service.

B. Pension Benefit Guaranty Corporation.

C. Constitution of the United States.

D. Department of Labor.

 

6. Which one of the following pension plans is a profit-sharing plan?

A. Cash-balance pension plan

B. Defined-benefit pension plan

C. Age-weighted plan

D. Money-purchase pension plan

 

7. The main purpose of most qualified retirement plan rules is to

A. prevent employer discrimination in favor of higher-paid employees.

B. make sure both salaried and wage-earning employees are covered wherever the company does business.

C. maintain the benefit security of higher-paid employees whose work is most critical to a company’s operations.

D. prevent employer discrimination against minorities and women.

 

8. The Civil Rights Act of 1964 prohibits employers from discrimination based on race, religion, sex, or national origin. Which one of the following factors has the most significant impact on pension benefit design?

A. Race

B. Sex

C. National origin

D. Religion

 

9. McCarthy Plumbing pays its employees a retirement benefit of 15 percent of their ending salary, regardless of the amount of time they’ve worked for the company. What type of defined-benefit plan does McCarthy Plumbing offer?

A. Past service

B. Unit-benefit formula

C. Flat-benefit formula

D. Guaranteed-account formula

 

10. Mr. Miesner, the CEO of Global Inc., owns a 25 percent interest in his company. Based on this information, you can assume that Mr. Miesner is

A. a highly compensated employee.

B. a leased employee.

C. ineligible for special tax treatment.

D. eligible for early retirement.

 

11. Jeff and his wife, who have been separated for six months, have filed for divorce. Jeff retired from his company last week, and his benefits department gave him a form to sign that would give his spouse an annuity for the rest of her life. If Jeff doesn’t want his wife to receive these benefits, what must he do?

A. He doesn’t have to do anything. Unless the form is signed by Jeff, the annuity won’t be valid.

B. He must have his wife sign the form (refusing the benefit) and have it notarized.

C. He must send written confirmation to the benefit administrator that he doesn’t desire this benefit.

D. He should wait until the divorce is finalized, since the annuity will be canceled at that time.

 

12. Overall, the most simple form of a qualified plan is a _______ plan.

A. government subsidized

B. target pension

C. money-purchase

D. profit-sharing

 

13. Acme Co. uses a particular retirement plan to finance the business. This plan is called an employee

A. security ownership plan.

B. stock bonus plan.

C. savings option plan.

D. savings of pensions.

 

14. John works for a company that uses the fractional rule to determine the accrued retirement benefit granted to its employees. John retires at age 60 after working for the company for 20 years. The plan’s normal retirement age is 65. John would have received a benefit of $40,000 at 65. How much will he receive when he retires at age 60?

A. $32,000

B. $28,000

C. $20,000

D. $35,000

 

15. A qualified joint and survivor annuity is a/an

A. postretirement death benefit for a spouse that’s payable even if the spouse remarries.

B. mandatory death benefit for a spouse.

C. open-ended death benefit in which a spouse can enroll at any time.

D. nontaxable savings plan.

 

16. Ken wishes to appeal a tax assessment of $20,000. He would like to appeal the assessment without having to first pay the disputed amount of $20,000. Which court should he appeal to?

A. U.S. Claims Court

B. U.S. Tax Court

C. Federal Appeals Court

D. Federal District Court

 

17. Les is a high-level executive with a seven-figure salary. Part of his executive compensation includes a pension. Les most likely has a _______ pension plan.

A. average-rate compensated

B. nonqualified

C. qualified

D. highly compensated

 

18. OASDI is an acronym that’s used to explain how to calculate

A. service dates.

B. final pension numbers.

C. Social Security benefits.

D. maximum offset allowance.

 

19. Under ERISA, the assets of all qualified plans must be valued by the actuary every _______ year(s).

A. four

B. two

C. three

D. five

 

20. Worth & Son Inc. is considering a pension plan that would integrate with the participant’s Social Security benefits. Why would the company want to do this?

A. To encourage retirement of the older employees

B. To lower the cost for the employer

C. To attract and retain younger employees

D. To make the benefit plan easier to understand and administer