Question 1

A profit-sharing plan is a type of

Accepted Answer

A profit-sharing plan is a type of defined contribution plan where contributions are made primarily by the employer, and the amount contributed can vary based on the company's profits.

Question 2

Employment at will is

Accepted Answer

Employment at will means that the employment relationship can be terminated at any time by either the employer or the employee without any specific cause or reason, as long as the termination does not violate any laws or agreements.

Question 3

A retirement benefit plan that is integrated with the employer's contribution to Social Security on behalf of the participant is referred to as a(n)

Accepted Answer

An integrated plan refers to a retirement benefit plan that coordinates or integrates its benefits with Social Security benefits, often adjusting the employer's contribution based on the Social Security benefits the employee is expected to receive.

Question 4

A covenant not to compete will generally be enforceable if

Accepted Answer

Covenants not to compete are generally enforceable if they are considered reasonable in terms of duration, geographical area, and scope of activity restricted. They must protect a legitimate business interest without imposing undue hardship on the employee or harming the public interest.

Question 5

Inventions and patents are always the property of the employer.

Accepted Answer

Inventions and patents can be the property of the inventor or their employer, depending on the terms of employment, the nature of the invention, and the laws of the country in which the invention was made.

Question 6

A qualified plan that establishes individual accounts for each plan participant and provides benefits based solely on the amount contributed to the participants' accounts is referred to as a

Accepted Answer

A defined contribution plan is a type of retirement plan where the benefits are based on the contributions to each participant's account, including any gains, losses, and any fees or expenses charged to the account.

Question 7

Employee benefit plans that meet with certain requirements of the Internal Revenue Code and qualify for special tax treatment are referred to as qualified retirement plans.

Accepted Answer

Qualified retirement plans meet specific requirements set by the Internal Revenue Code, allowing them to receive favorable tax treatment, such as tax-deferred growth on earnings within the plan.

Question 8

The federal act regulating pension plans, to protect qualified plan participants and their beneficiaries by governing the funding, vesting, administration, and termination of pension plans, is known as the

Accepted Answer

The Employee Retirement Income Security Act of 1974 (ERISA) is the federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.

Question 9

A favorable determination letter issued by the Internal Revenue Service states that the plan has been reviewed and that it complies with the requirements for a qualified plan.

Accepted Answer

A favorable determination letter from the IRS indicates that the plan has been reviewed and meets the necessary requirements to be considered a qualified plan under the relevant tax laws.

Question 10

Qualified retirement plan sponsors can choose to be regulated under either the Internal Revenue Code or the Employee Retirement Income Security Act of 1974.

Accepted Answer

Qualified retirement plan sponsors must comply with both the Internal Revenue Code (for tax qualification requirements) and the Employee Retirement Income Security Act of 1974 (ERISA) for fiduciary, reporting, and disclosure requirements.

Question 11

A qualified plan can be made by an oral agreement.

Accepted Answer

A qualified plan must be in writing and cannot be based solely on an oral agreement. It requires a formal written document that specifies the plan's provisions and operations.

Question 12

A qualified plan administrator is an individual or entity that adopts a qualified plan for the benefit of the administrator's employees or their beneficiaries.

Accepted Answer

A qualified plan administrator is responsible for managing and overseeing a qualified retirement plan, but they do not adopt the plan for their own employees; rather, they ensure compliance and proper administration of the plan for the benefit of the plan participants.

Question 13

Qualified plan contributions may be made by the plan sponsor and/or the plan participant.

Accepted Answer

Qualified plan contributions can indeed be made by both the plan sponsor (employer) and the plan participant (employee). This allows for flexibility in funding retirement benefits.

Question 14

Defined benefit plans establish an individual account for each participant.

Accepted Answer

Defined benefit plans promise a specified monthly benefit at retirement, often based on salary and years of service, rather than establishing individual accounts for each participant.

Question 15

Qualified plans designed to give partial ownership of the corporation to the employees are referred to as

Accepted Answer

Employee Stock Ownership Plans (ESOPs) are designed to provide employees with an ownership interest in the company, often as a form of retirement benefit, aligning employee interests with shareholder interests.

Question 16

An employer would not enter into an employment agreement to

Accepted Answer

Employment agreements are designed to outline the terms of employment, protect trade secrets, and sometimes include non-compete clauses. However, they cannot be used to force an employee to continue working against their will, as this would be considered involuntary servitude and is illegal.

Question 17

An agreement, generally found within an employment agreement, that restricts the employee's future employment and actions that may possibly compete with the employer's business is referred to as a(n)

Accepted Answer

A covenant not to compete, also known as a non-compete clause, is designed to prevent an employee from entering into or starting a similar profession or trade in competition against the employer.

Question 18

An employment agreement is best described as an agreement

Accepted Answer

An employment agreement is a contract between an employer and employee that outlines the rights and obligations of both parties concerning the employee's employment, including job responsibilities, compensation, and conditions of employment.

Question 19

Contributions to defined contribution plans are based solely on the amount that will eventually be paid out to the participant, not on the income or profits of the corporation.

Accepted Answer

Contributions to defined contribution plans are typically based on a percentage of the employee's salary or wages, not on the specific amount that will eventually be paid out, nor are they directly tied to the corporation's income or profits.

Question 20

A_________ may be submitted to the Internal Revenue Service to request a favorable de- termination letter with regard to an employee benefit plan.

Accepted Answer

Form 5300 (Application for Determination for Employee Benefit Plan) is specifically designed for employers to request a determination from the IRS about the qualification of their employee benefit plan, ensuring it meets the necessary tax-qualification requirements.

Quiz 15: Employee Benefits and Employment Agreements