Question 1

Data for the only nine participants that have ever been in the plan: Stock Present value of DistributionsParticipant ownership 2012 accrued benefit asnumber percentage compensation 2011 2012 of 12/31/20121 50.0 $200,000 $0 $50,000 $200,0002 0.5 200,000 0 0 30,0003 3.0 160,000 0 0 80,0004 3.0 125,000 0 0 50,0005 6.0 100,000 0 0 60,0006 0 70,000 40,000 20,000 20,0007 0 50,000 0 40,000 40,0008 0 30,000 0 0 30,0009 0 0 0 0 100,000 Participant 9 terminated employment on 11/1/2011. All others were employed for the entire 2011 and 2012 plan years. Participants 1 and 5 are the only officers. The stock ownership percentages and officer statuses have never changed since the company's inception. Present values of accrued benefits as of 12/31/2012 do not include the value of any distributions received. No distributions were ever paid from the plan prior to 2011.In what range is top-heavy ratio for 2013?

Accepted Answer

A)  Less than 0.51
B)  0.51 but less than 0.56
C)  0.56 but less than 0.61
D)  0.61 but less than 0.66
E)  0.66 or more C

Question 2

Data for participant Smith: Age 65Years of service 10 Average compensation for highestconsecutive 3 years of participation $50,000 The plan provides the qualified joint and 100% survivor annuity on a fully subsidized basis. Consider the following statement:The maximum annual annuity Smith can receive in the form of a qualified joint and 100% survivor annuity is $50,000.Is the above statement true or false?

Accepted Answer

A) True 
 B)False  True

Question 3

Smith pays $950 for an investment that returns $500 at the end of year 3, and $700 at the end of year 4. The price is based on a 2-year spot rate of 5.0% and a 4-year spot rate of 7.0%. X = the year 3 forward rate (i.e., the 2-year deferred, 1-year spot rate).In what range is X?

Accepted Answer

A)  Less than 7.0%
B)  7.0% but less than 7.7%
C)  7.7% but less than 8.4%
D)  8.4% but less than 9.1%
E)  9.1% or more D

Question 4

A plan provides a preretirement death benefit equal to the present value of the accrued benefit. Plan's actuarial equivalence assumptions: Interest rate 7.5% Pre-commencement mortality table None Post-commencement mortality table Applicable mortality under IRC section 417(e) Early retirement benefit is based on plan actuarial equivalence. Selected data for participant Smith: Date of birth 12/31/1952 Date of hire 1/1/2005 Date of participation 1/1/2006 Date of retirement 12/31/2012 Compensation for each year $150,000 Form of benefit elected Life annuitySingle life annuity factors based on the applicable mortality table at selected retirement ages and interest rates: Age 5.0% 7.5%60 13.56 10.84 62 12.98 10.50In what range is Smith's IRC section 415 limit as of 12/31/2012?

Accepted Answer

A)  Less than $118,000
B)  $118,000 but less than $121,000
C)  $121,000 but less than $124,000
D)  $124,000 but less than $127,000
E)  $127,000 or more

Question 5

A sponsor maintains Plan A and Plan B. Information for the 2012 plan year: FTAP Unfunded vested benefitsPlan A 75% $13,000,000 Plan B 84% $50,000,000 Consider the following statement: Reporting under ERISA section 4010 is required for this sponsor for the 2012 plan year.Is the above statement true or false?

Accepted Answer

A) True 
 B)False

Question 6

Smith has the option of receiving a benefit in the form of an annuity beginning in one year.The annuities, each of which is actuarially equivalent, are:Option 1 A life annuity of $1,000 per yearOption 2 A life annuity of X per year, decreasing to 50% of X payable to Smith's spouse after Smith's death Option 3 A life annuity of $875 per year, payable while either Smith or Smith's spouse is aliveIn what range is X?

Accepted Answer

A)  Less than $920
B)  $920 but less than $925
C)  $925 but less than $930
D)  $930 but less than $935
E)  $935 or more

Question 7

Type of plan: Statutory hybrid planAccount balance: The sum of pay credits and interest creditsPay credits: 3% of annual pay, credited at the end of the yearInterest credits: Equal to the actual annual rate of return on plan assets multiplied by the beginning of year account balance Vesting: The minimum vesting schedule allowedData for participant Smith: Date of hire 1/1/2008 Date of termination 12/31/2011 Compensation (each year) $50,000 Historical returns on plan assets: 2008 8% 2009 6% 2010 2% 2011 ?22% The plan provides for a lump sum in the amount of the vested account balance.In what range is Smith's lump sum payable at 1/1/2012?

Accepted Answer

A)  Less than $3,650
B)  $3,650 but less than $4,450
C)  $4,450 but less than $5,250
D)  $5,250 but less than $6,050
E)  $6,050 or more

Question 8

Consider the following statement: Upon the plan administrator's request, an enrolled actuary must provide supplemental advice or explanation relative to an actuarial report certified by the enrolled actuary.Is the above statement true or false?

Accepted Answer

A) True 
 B)False

Question 9

A survival function is defined as follows: sx ( = 1 ? X/250); 0 ? x ? 25l X= 1000 (100 ? x ); x ? 25In what range is 30 /10 q10 ?

Accepted Answer

A)  Less than 0.120
B)  0.120 but less than 0.135
C)  0.135 but less than 0.150
D)  0.150 but less than 0.165
E)  0.165 or more

Question 10

Funding balances at 1/1/2012: $0 Normal retirement benefit: $20 per year of service On 2/1/2012, the 2012 AFTAP is certified at 75% On 3/1/2012, the plan's benefit formula is amended to: $20 per month per year of service accrued through 2/29/2012, plus $25 per month per year of service accrued after 3/1/2012. No contributions are made during 2012. Consider the following statement: The amendment can take effect on 3/1/2012.Is the above statement true or false?

Accepted Answer

A) True 
 B)False

Question 11

Terms of two actuarially equivalent annuities: Annuity A: $500 at the end of each of the first 3 months, and $1,000 at the end of each of the next 9 months Annuity B: X at the end of each of the first 2 quarters, and 2X at the end of the next 2 quarters Interest rate: 8% per year, compounded monthly In what range is X?

Accepted Answer

A)  Less than $1,770
B)  $1,770 but less than $1,800
C)  $1,800 but less than $1,830
D)  $1,830 but less than $1,860
E)  $1,860 or more

Question 12

A defined benefit plan terminates with excess assets and is amended within the 60 day period prior to the plan termination date to provide a 5% pro-rata increase of participant benefits as of the termination date. The plan sponsor establishes a defined contribution plan as a qualified replacement plan and transfers into this plan the minimum amount necessary to lower the excise tax rate on any reversion to less than 50%. Selected data as of the asset distribution date: Market value of assets $2,100,000 Termination liability prior to 5% pro-rata increase $1,600,000X= the amount of the actual excise tax due from the employer. Y = the amount of the excise tax that would have been due had the qualified replacement plan not been established. In what range is X - Y ?

Accepted Answer

A)  Less than $132,000
B)  $132,000 but less than $150,000
C)  $150,000 but less than $168,000
D)  $168,000 but less than $186,000
E)  $186,000 or more

Question 13

Normal retirement age: 62Plan assumptions: Interest 4.0% Mortality 1994 GARDeath benefit prior to retirement is the present value of accrued benefits. Benefit at late retirement is the greater of continued accruals and an actuarial increase. Selected data for Smith: Date of birth 12/31/1942 Date of hire 1/1/2000 Date of participation 1/1/2006 Date of retirement 12/31/2012 Compensation for each year of service $225,000Selected commutation functions:5% and applicable mortalityx N(12)x D x N(12)X Dx62 598,284 46,091 1,466,321 82,76965 470,592 38,961 1,232,637 72,90070 301,642 28,773 904,410 58,535In what range is Smith's annual IRC section 415 limit as of 12/31/2012?

Accepted Answer

A)  Less than $175,000
B)  $175,000 but less than $190,000
C)  $190,000 but less than $205,000
D)  $205,000 but less than $220,000
E)  $220,000 or more

Question 14

A participant will retire at age 80.Selected data:p80 = 0.9521 using unprojected mortalityp81 = 0.9461 using unprojected mortalityi = 6.0%, compounded annuallyX = 20 2 a60 using unprojected mortality Y = 20 2 a60 using post-retirement mortality that is projected with 1% annual mortality improvements from this participant's age 60. Pre-retirement mortality is not projected. In what range is Y/ X ?

Accepted Answer

A)  Less than 1.0140
B)  1.0140 but less than 1.0142
C)  1.0142 but less than 1.0144
D)  1.0144 but less than 1.0146
E)  1.0146 or more

Question 15

Plan effective date: 1/1/1990 Consider the following statement: The plan administrator must provide each participant with a copy of the summary plan description no later than 90 days after an employee becomes a participant in the plan. Is the above statement true or false?

Accepted Answer

A) True 
 B)False

Question 16

Consider the following statement: The only circumstance that would allow for any portion of plan assets to be returned to a plan sponsor is a plan termination.Is the above statement true or false?

Accepted Answer

A) True 
 B)False

Question 17

Terms of two actuarially equivalent annuities: Annuity A Annuity B Issue age 40 40 Type of annuity Perpetuity Life annuity Frequency of payment Monthly MonthlyTiming of payment End of Month End of MonthAmount of each payment P 1,000Selected values: x q x D x Nx 40 0.002125 651 870041 0.002327 607 8049 In what range is P?

Accepted Answer

A)  Less than $860
B)  $860 but less than $875
C)  $875 but less than $890
D)  $890 but less than $905
E)  $905 or more

Question 18

Selected values from a two-decrement table: q1(1)X = 0.03 q(2)X = 0.10 Each decrement is assumed to be uniformly distributed between ages x and x +1 in the associated single-decrement table. In what range is q(r)X ?

Accepted Answer

A)  Less than 0.1270
B)  0.1270 but less than 0.1280
C)  0.1280 but less than 0.1290
D)  0.1290 but less than 0.1300
E)  0.1300 or more

Question 19

Retirement benefits for Smith (age 61) and Jones (age 60) payable annually: Smith: a 5-year temporary life annuity-due of XJones: a 10-year certain and life annuity-due of $20,000The present value of Jones's annuity is 4 times that of the present value of Smith's annuity.Selected actuarial factors: a60 = 11.53496a 60:10 = 7.26514a62:4 = 3.58056P61 = 0.99394i = 7.0% per year, compounded annuallyIn what range is X?

Accepted Answer

A)  Less than $13,050
B)  $13,050 but less than $13,350
C)  $13,350 but less than $13,650
D)  $13,650 but less than $13,950
E)  $13,950 or more

Question 20

The market value of a fund and its cash flows at various dates in a calendar year are shown below: Date Value of fund before withdrawals Withdrawals1/1 $300,000 $0 m months after 1/1 315,000 15,000 2m months before 12/31 315,000 15,000 12/31 315,000 0The dollar-weighted rate of return for the year is 16.0%. In what range is m?

Accepted Answer

A)  Less than 2.1
B)  2.1 but less than 2.5
C)  2.5 but less than 2.9
D)  2.9 but less than 3.3
E)  3.3 or more

Exam 1: Enrolled Actuary

Smith pays $950 for an investment that returns $500 at the end of year 3, and $700 at the end of year 4. The price is based on a 2-year spot rate of 5.0% and a 4-year spot rate of 7.0%. X = the year 3 forward rate (i.e., the 2-year deferred, 1-year spot rate) .In what range is X?

Consider the following statement: Upon the plan administrator's request, an enrolled actuary must provide supplemental advice or explanation relative to an actuarial report certified by the enrolled actuary.Is the above statement true or false?

A survival function is defined as follows: sx ( = 1 ? X/250) ; 0 ? x ? 25l X= 1000 (100 ? x ) ; x ? 25In what range is 30 /10 q10 ?

Plan effective date: 1/1/1990 Consider the following statement: The plan administrator must provide each participant with a copy of the summary plan description no later than 90 days after an employee becomes a participant in the plan. Is the above statement true or false?

Consider the following statement: The only circumstance that would allow for any portion of plan assets to be returned to a plan sponsor is a plan termination.Is the above statement true or false?

Selected values from a two-decrement table: q1(1) X = 0.03 q(2) X = 0.10 Each decrement is assumed to be uniformly distributed between ages x and x +1 in the associated single-decrement table. In what range is q(r) X ?