Retirement final exam | Business & Finance homework help


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


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


5. Contribution limits for a SIMPLE IRA are the same as other qualified plans, but 

6. with less administrative cost.


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


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


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


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


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


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


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


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


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


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


28.  Divorce is considered a qualifying event for COBRA


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


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


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


36. 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. 


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


40. 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


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

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

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

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

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

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

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

49. 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

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

51. 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

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

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

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

55. Medicare is available for individuals age 65 and over

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

57. Medicare Part D covers prescription drugs

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

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

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

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

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

63. Roth IRA’s are subject to income limitations

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

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

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

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

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

69. A summary plan description is a

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

71. 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

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

73. A traditional IRA

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

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

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

77. COBRA qualifying events include

78. 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?

79. 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?

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

81. The bargain element in a stock option is

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

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

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

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

86. Taking a loan from an IRA

87. 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?     

88. Fiduciaries must:

89. 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

90. 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?

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

92. The Form 5500 Annual Report must be filed

93. 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

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

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

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

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

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

99. 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?

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

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

102. Medicare Part B covers all of the following:

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

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

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

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

107. Fiduciary status is determined by

108. 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

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

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

111. 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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