Question 1

Retirement after the normal retirement age often results in increasing benefits that are higher than the amount justified from an actuarial perspective.

Accepted Answer

A) True 
 B)False  False

Question 2

Match the descriptions with their terms:
-_________________ keep the pension funds in trust for a group of employees and at retirement the pension often is paid from the general fund.

Accepted Answer

A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans 
A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans M

Question 3

Which of the following statements is not true in relation to mandatory retirement ages?

Accepted Answer

A)  Mandatory retirement ages are never allowed, 
B)  Mandatory retirement ages specify an age at which an employee must retire, 
C)  Prior to 1986, the lowest mandatory retirement age allowed was 70, 
D)  Mandatory retirement ages are sometimes allowed. 
A)  Mandatory retirement ages are never allowed, 
B)  Mandatory retirement ages specify an age at which an employee must retire, 
C)  Prior to 1986, the lowest mandatory retirement age allowed was 70, 
D)  Mandatory retirement ages are sometimes allowed. A

Question 4

Dr. William Fleming, Sr. turned 62 in 2004. He retires at age 67 (his Social Security normal retirement age is 65 years and 10 months). His PIA is $1,000. If he elects to receive social security benefits upon retirement, what monthly amount would he receive?

Accepted Answer

A)  $1,065, 
B)  $1,088, 
C)  $1,000, 
D)  $2,000. 
A)  $1,065, 
B)  $1,088, 
C)  $1,000, 
D)  $2,000.

Question 5

Match the descriptions with their terms:
-A/An _________________ specifies the amount that the employer will contribute to the plan, with the exact amount of retirement benefit to be paid left undetermined until each employee retires.

Accepted Answer

A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans 
A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans

Question 6

Match the descriptions with their terms:
-A/An _________________ allows employees to deduct the amount of their contributions in the year made and to defer income taxes on the investment earnings until distribution to the employee. It may involve contributions made by the employer matching a percentage of each employee's contribution.

Accepted Answer

A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans 
A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans

Question 7

The Pension Benefit Guarantee Corporation (PBGC) is a federal agency that provides optional plan termination insurance for employees covered by qualified defined benefit pension plans.

Accepted Answer

A) True 
 B)False

Question 8

In order to make a 401(k) plan attractive from the perspective of employees, employers must make matching contributions.

Accepted Answer

A) True 
 B)False

Question 9

Vesting deals with the degree to which a particular plan participant's pension benefits have been funded.

Accepted Answer

A) True 
 B)False

Question 10

Retirement plans that are designed for use by self-employed individuals are

Accepted Answer

A)  Section 403(b) plans, 
B)  Keogh plans, 
C)  thrift plan, 
D)  SIMPLEs. 
A)  Section 403(b) plans, 
B)  Keogh plans, 
C)  thrift plan, 
D)  SIMPLEs.

Question 11

Defined benefit plans use a specified formula to determine the level of benefits that a retiree will receive.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is true in relation to the normal retirement age (NRA) of a qualified pension plan?

Accepted Answer

A)  The NRA generally is higher in defined contribution plans than in defined benefit plans, 
B)  All qualified plans specify an NRA, 
C)  NRAs must be between 62 and 65, 
D)  The NRA is always specified as the age of the employee. 
A)  The NRA generally is higher in defined contribution plans than in defined benefit plans, 
B)  All qualified plans specify an NRA, 
C)  NRAs must be between 62 and 65, 
D)  The NRA is always specified as the age of the employee.

Question 13

A Keogh plan is a retirement plan designed for persons with self-employment income and can be in the form of either a profit sharing or a pension plan.

Accepted Answer

A) True 
 B)False

Question 14

Match the descriptions with their terms:
-_________________ must meet minimum requirements specified in the Internal Revenue Code.

Accepted Answer

A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans 
A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans

Question 15

Match the descriptions with their terms:
-_________________ allows an employer to make higher contributions for employees who have an income level above a chosen integration level.

Accepted Answer

A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans 
A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans

Question 16

Which of the following statements is not true in relation to minimum eligibility requirements for participation in pension plans?

Accepted Answer

A)  The highest minimum age requirement is 21 years, 
B)  Plans can include a minimum service requirement, 
C)  These requirements are the same as required for other employee benefits such as employer provided group life insurance, 
D)  Within certain limits, specified job classifications can be excluded from coverage. 
A)  The highest minimum age requirement is 21 years, 
B)  Plans can include a minimum service requirement, 
C)  These requirements are the same as required for other employee benefits such as employer provided group life insurance, 
D)  Within certain limits, specified job classifications can be excluded from coverage.

Question 17

PBGC termination insurance is required of all

Accepted Answer

A)  employee benefit plans, 
B)  pension plans, 
C)  qualified pension plans, 
D)  qualified defined benefit plans. 
A)  employee benefit plans, 
B)  pension plans, 
C)  qualified pension plans, 
D)  qualified defined benefit plans.

Question 18

In designing qualified pension plans, employers are not regulated as long as the plan is considered nondiscriminatory.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is not true about early retirement options for pension plan participants?

Accepted Answer

A)  Employers do not have to allow workers to retire and begin collecting benefits before the normal retirement age, 
B)  If a participant in a defined benefit pension plan chooses to retire early, the benefit will typically be the amount determined by application of the benefit formula without adjustment for actuarial factors, 
C)  Additional funding generally is not required at early retirement if the benefit is reduced to the full actuarial equivalent of the benefit payable at the normal retirement age, 
D)  Early retirement can be encouraged by granting more than the full actuarial equivalent if a participant chooses to retire early. 
A)  Employers do not have to allow workers to retire and begin collecting benefits before the normal retirement age, 
B)  If a participant in a defined benefit pension plan chooses to retire early, the benefit will typically be the amount determined by application of the benefit formula without adjustment for actuarial factors, 
C)  Additional funding generally is not required at early retirement if the benefit is reduced to the full actuarial equivalent of the benefit payable at the normal retirement age, 
D)  Early retirement can be encouraged by granting more than the full actuarial equivalent if a participant chooses to retire early.

Question 20

Match the descriptions with their terms:
-Although prior to 1986 many employers were allowed to specify a/an _________________, this practice is not permitted now for most jobs.

Accepted Answer

A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans 
A)  401(k) plan 
B)  Allocated plans 
C)  defined benefit plan 
D)  defined contribution plan 
E)  Keogh plans
F) lump-sum distribution option
G) Mandatory retirement age
H) normal retirement age
I) Permitted disparity
J) Qualified plans
K) rollover
L) Section 403(b) plans
M) Unallocated plans

Exam 20: Employee Benefits: Retirement Plans

Retirement after the normal retirement age often results in increasing benefits that are higher than the amount justified from an actuarial perspective.

Match the descriptions with their terms: -_________________ keep the pension funds in trust for a group of employees and at retirement the pension often is paid from the general fund.

Which of the following statements is not true in relation to mandatory retirement ages?

Dr. William Fleming, Sr. turned 62 in 2004. He retires at age 67 (his Social Security normal retirement age is 65 years and 10 months). His PIA is $1,000. If he elects to receive social security benefits upon retirement, what monthly amount would he receive?

Match the descriptions with their terms: -A/An _________________ specifies the amount that the employer will contribute to the plan, with the exact amount of retirement benefit to be paid left undetermined until each employee retires.

The Pension Benefit Guarantee Corporation (PBGC) is a federal agency that provides optional plan termination insurance for employees covered by qualified defined benefit pension plans.

In order to make a 401(k) plan attractive from the perspective of employees, employers must make matching contributions.

Vesting deals with the degree to which a particular plan participant's pension benefits have been funded.

Retirement plans that are designed for use by self-employed individuals are

Defined benefit plans use a specified formula to determine the level of benefits that a retiree will receive.

Which of the following statements is true in relation to the normal retirement age (NRA) of a qualified pension plan?

A Keogh plan is a retirement plan designed for persons with self-employment income and can be in the form of either a profit sharing or a pension plan.

Match the descriptions with their terms: -_________________ must meet minimum requirements specified in the Internal Revenue Code.

Match the descriptions with their terms: -_________________ allows an employer to make higher contributions for employees who have an income level above a chosen integration level.

Which of the following statements is not true in relation to minimum eligibility requirements for participation in pension plans?

PBGC termination insurance is required of all

In designing qualified pension plans, employers are not regulated as long as the plan is considered nondiscriminatory.

Which of the following statements is not true about early retirement options for pension plan participants?

Match the descriptions with their terms: -Although prior to 1986 many employers were allowed to specify a/an _________________, this practice is not permitted now for most jobs.

Introduction to Risk

Risk Identification and Evaluation

Property and Liability Loss Exposures

Life, Health, and Loss of Income Exposures

Risk Management Techniques: Noninsurance Methods

Insurance As a Risk Management Technique: Principles

Insurance As a Risk Management Technique: Policy Provisions

Selecting and Implementing Risk Management Techniques

Risk Management and Commercial Propertypart I

Risk Management and Commercial Propertypart II

Risk Management and Commercial Liability Risk

Workers Compensation and Alternative Risk Financing

Risk Management for Auto Ownerspart I

Risk Management for Auto Ownerspart II

Risk Management for Homeowners

Loss of Life

Loss of Health

Retirement Planning and Annuities

Employee Benefits: Life and Health Benefits

Financial and Estate Planning

Risk Management and the Insurance Industry

Functions and Organization of Insurers

Government Regulation of Risk Management and Insurance

Filters