1. Wilbur turned 70 years old in June. If he hasn't already,
what should he expect to receive by April 1 of the next year?
A. A full explanation of the retirement benefit package
B. Documentation of the accrual of benefits
C. An end-of-year service award
D. A qualified-plan benefit payout
2. 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. $20,000
B. $28,000
C. $32,000
D. $35,000
3. Acme Co. uses a particular retirement plan to finance the business. This plan is called an employee
A. savings option plan.
B. security ownership plan.
C. savings of pensions.
D. stock bonus plan.
4. 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. Guaranteed-account formula
C. Unit-benefit formula
D. Flat-benefit formula
5. 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 should wait until the divorce is finalized, since the annuity will be canceled at that time.
B. He must send written confirmation to the benefit administrator that he doesn't desire this benefit.
C. He must have his wife sign the form (refusing the benefit) and have it notarized.
D. He doesn't have to do anything. Unless the form is signed by Jeff, the annuity won't be valid.
6. Gahanna Inc. receives tax benefits from its retirement plan. Therefore, you can assume that the plan is most likely
A. federally mandated.
B. nonqualified.
C. qualified.
D. exempt.
7. 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. ineligible for special tax treatment.
B. a highly compensated employee.
C. eligible for early retirement.
D. a leased employee.
8. A fiduciary is not allowed to
A. accept employer contributions.
B. pay out benefits.
C. make investments and accumulate earnings.
D. gain personal profit from the trust.
9. 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.
10. Which one of the following pension plans is a profit-sharing plan?
A. Defined-benefit pension plan
B. Age-weighted plan
C. Cash-balance pension plan
D. Money-purchase pension plan
11. For all practical purposes, the primary source of significant regulations regarding employee benefits is the
A. Internal Revenue Service.
B. Department of Labor.
C. Constitution of the United States.
D. Pension Benefit Guaranty Corporation.
12. 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. Federal District Court
C. Federal Appeals Court
D. U.S. Tax Court
13. 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. Stream Corporation doesn't have a stable benefit disbursement history.
C. Matrix Insurance is a funding agency.
D. Stream Corporation is a whole-life contract provider.
14. OASDI is an acronym that's used to explain how to calculate
A. final pension numbers.
B. maximum offset allowance.
C. service dates.
D. Social Security benefits.
15. Under ERISA, the assets of all qualified plans must be valued by the actuary every _______ year(s).
A. two
B. three
C. four
D. five
16. Overall, the most simple form of a qualified plan is a _______ plan.
A. profit-sharing
B. target pension
C. money-purchase
D. government subsidized
17. The qualified plan in which an actuary determines the level of needed contributions is the _______ plan.
A. profit-sharing
B. pension
C. defined contribution
D. defined benefit
18. Which one of the following statements about contributory pension plans is most accurate?
A. Contributory plans give employees some degree of choice in allocating their compensation between cash and deferred benefits.
B. The contributory approach lowers the cost of pension benefit plans.
C. The least favorable contributory plan involves salary reduction.
D. Employees appreciate their benefit plans more when they contribute to benefit funding.
19. A major cause for the establishment of the Social Security system was the
A. Revenue Act of 1926.
B. Revenue Act of 1921.
C. Vietnam War.
D. Great Depression.
20. 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. qualified
B. average-rate compensated
C. highly compensated
D. nonqualified
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