Retirement final exam | Business & Finance homework help


1. An employee can be covered under both a defined benefit and a defined contribution plan

2. Flexible Spending Accounts let you carry over all unused funds from year to year.

3. Contribution limits for a SIMPLE IRA are the same as other qualified plans, but with less administrative cost.

4. Social Security benefits are based on your highest 10 years of earnings

5. The cost of the first $50,000 of group-term insurance provided for each employee is tax-free to the employee.

6. There are no minimum distribution requirements at age 72 for Roth IRA’s, but there are for traditional IRAs

7. Deductibles are initial expenses paid by employees toward covered benefits

8. The investment risk in a Cash Balance plan is borne by the company

9. A SIMPLE plan can be used by an employer that has 200 or fewer employees

10. A flexible spending account is a type of cafeteria plan funded with salary reductions that an employee elects annually

11. When converting from a traditional IRA to a Roth IRA, the amount converted is included in gross income for federal tax purposes

12. A nonqualified deferred compensation plan is required to provide immediate vesting of benefits

13. A profit sharing plan would not be suitable for a company seeking flexibility since annual contributions are required every single year.

14.  Divorce is considered a qualifying event for COBRA

15. Individuals over age 50 can contribute an additional $1,000 to a health savings account as a catch-up contribution

16. Employees must be over age 55 to make catch-up contributions to an IRA or 401(k) plan

17. As part of the employee benefit planning process, a schedule should be established for reviewing and monitoring plan effectiveness

18. Required minimum distributions from a qualified retirement plan must begin no later than April 1st of the calendar year following the later of age 72 or retirement. 

19. The contribution limit for Roth 401k accounts in 2021 is $6,000

20. The ratio percentage test states that a qualified plan must cover a percentage of nonhighly compensated employees that is at least 50% of the percentage of highly compensated employees covered

21. The first step in the planning process is to identify the employer’s objectives

22. Medicare Part B coverage is free. You pay into it during your working years.

23. An individual who renders investment advice for a fee would be considered a fiduciary. 

24. Companies match employee contributions to 401(k) plans to incentivize employees to participate and save for their own retirement. 

25. The total contribution limit for 401k salary deferrals and company matching contributions in 2021 for a participant age 54 is $19,500

26. A defined benefit plan can help an older controlling employee in a small business maximize tax-deferred savings

27. Employers who are worried about nondiscrimination requirements can opt for a “safe harbor” plan that ensures compliance

28. Employees under age 59.5 who take loans from their profit sharing plan must pay 10% of the loan amount as a penalty as well as reasonable interest on the funds borrowed

29. Long-term disability payments usually replace 100% of salary

30. A matching contribution of 50% of employee salary deferral contributions up to 4% of compensation, or a non-elective contribution greater than or equal to 2% of compensation, would satisfy the Safe Harbor requirements

31. Defined benefit plans provide more benefit security than do 401(k) plans

32. Anyone who has discretionary authority or discretionary control in the management and administration of a qualified plan is generally considered a fiduciary

33. Spouses receive the greater of 100% of their own Social Security benefit or 50% of their spouses

34. Medicare is available for individuals age 65 and over

35. An individual’s benefit increases roughly 8% for every year past normal retirement age they delay collecting Social Security up to age 70.

36. Medicare Part D covers prescription drugs

37. The nonstatutory stock option (ISO) provides greater deferral of taxes to the executive than a incentive stock option

38. Distributions are not required from Roth IRAs until after the death of the IRA owner

39. Medicare Parts A, B, C, and D are all required for individuals who are eligible and not covered by an employer sponsored health plan

40. Benefits from health insurance are included in employee taxable income.

41. Employers can use a restricted stock plan to retain key employees

42. Roth IRA’s are subject to income limitations

43. High-deductible health insurance is recommended, but not required, with a health savings account

44. According to tax law, a Health Savings Account can only be established by an employer on behalf of an employee

45. The employee assumes investment risk in a defined benefit plan.

46. All the following distributions from Roth IRAs are tax-free, EXCEPT

47. Health plan coverage through COBRA must continue for ___ months after a qualifying event

48. A summary plan description is a

49. Individuals can begin collecting reduced Social Security benefits as early as age ___ and delay collecting until up to age

50. The minimum price a company can use as the purchase price of stock purchased under an employee stock purchase plan (ESPP) is ____% of the fair market value of the stock

51. The annual family contribution limit for a health savings account is

52. A traditional IRA

53. When can eligible persons establish an IRA account and claim the appropriate tax deduction?

54. All of the following are true regarding tax implications of cash balance plans, except

55. Which of the following is true about a SIMPLE IRA?

56. COBRA qualifying events include

57. Brynn Cynthia earns $290,000 a year at Premier Corp. One of Brynn’s employee benefits is a group-term life policy equal to her annual salary. Which of the following is true regarding this policy?

58. How much income does Danielle recognize at grant if she received 100 nonstatutory stock options with no readily ascertainable fair market value, a $3 exercise price and she exercised the option when the stock was worth $7 a share?

59. In health insurance plan design, which of the following are vitally important aspects of that design?

60. The bargain element in a stock option is

61. Distributions from a health saving account not for qualified medical expenses are subject a ___ penalty

62. Which of the following options is not an advantage for employees in 401k plans?

63. SIMPLE 401(k) Plans have the following requirements

64. Contributions to health savings account must cease when an individual reaches age

65. Taking a loan from an IRA

66. Lyla is Vice President of a national consulting company. She is 38 years old, married, and has 3 children. How much can she elect to contribute to her Roth 401(k) plan in 2021?     

67. Fiduciaries must:

68. Michelle James, founder of Mac Printing, wants to implement a retirement plan that would allow her to maximize contributions to her six executives. She does not want to fund a retirement plan for any of her 43 line workers. She should consider a

69. Wagner Capital, Inc. wants to install a retirement plan that will provide a minimum guaranteed level of benefits for its employees and take into account the age and past service of long-time employees.  What plan should they adopt?

70. The duties of fiduciaries include all of the following, except

71. The Form 5500 Annual Report must be filed

72. An individual is set to receive $1,000 per month in Social Benefits at normal retirement age of 66. If they delayed collecting until age 70, that monthly benefit would become roughly

73. When converting/rolling over an existing IRA to a Roth IRA, all of the following are true except

74. A 403(b) tax deferred annuity plan can invest in all of the following, except

75. Which of the following cannot be accomplished with a qualified retirement plan?

76. Elective deferrals in a 401(k) plan can be distributed upon occurrence of all of the following, except

77. All the following employees would be considered highly-compensated employees for 2021, EXCEPT

78. Danielle is 56 years old and owns 85% of her business. On average, her employees make $40,000 and range from age 20-34.  Danielle earns $460,000 annually. Which of the following retirement plans should Danielle implement if she wants to maintain flexibility, maximize retirement benefits for her, and keep costs down?

79. All the following are possible company objectives for implementing a qualified retirement plan, EXCEPT:

80. Both you and your employer contribute ___% of your pay into Social Security and ___% of your pay into Medicare. These are called FICA taxes

81. Medicare Part B covers all of the following:

82. The premiums/cost of Medicare Part D coverage depends on:

83. Social Security will pay benefits to all of the following, except:

84. Premiums for commercial health insurance contracts include all of the following except

85. Disadvantages of a flexible spending account include all of the following except

86. Fiduciary status is determined by

87. Charlie Reynolds has company stock obtained through an incentive stock option plan. Reynolds has held the stock 3 years after the option was granted and 2 years after exercise of the option. Charlie sold the stock last month. Tax consequences for Charlie include

88. The employer mandate requires that employers offer coverage to dependents up to age

89. An employee can purchase no more than $_____ of stock under an ESPP in any one calendar year

90. The _____ definition of disability is defined as the total and continuous inability of the employee to engage in any and every gainful occupation for which he or she is qualified or shall reasonably become qualified by reason of training, education, or experience

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