Question 1

In the context of employee benefits,the term "discrimination" refers to benefit comparisons between

Accepted Answer

Discrimination in employee benefits refers to favoring certain groups of employees over others. This could be based on factors such as age, gender, or salary level. Option C refers to discrimination based on compensation level and is a common issue in employee benefit plans. Highly compensated employees may receive more generous benefits than non-highly compensated employees, which can be viewed as discriminatory. Options A and D refer to discrimination based on protected classes (gender, religion, race), which is illegal and expressly prohibited by law. Option B refers to discrimination based on employment status, which may also be illegal in some cases.

Question 2

Winslow Corporation has many long-term employees.The company has never had a pension plan.Recently,a new management team was hired.The new president said he would like to start a pension plan through which he could reward the long-term service provided by many employees.Which of the following types of plans should Winslow Corporation adopt?

Accepted Answer

A defined benefit plan would be most suitable for rewarding long-term service provided by many employees. This type of plan provides a guaranteed benefit at retirement based on a formula that takes into account factors such as salary and years of service. This would be a good option for Winslow Corporation to reward the dedication of its long-term employees. The other options (403(b), 401(k), and money-purchase plans) are more appropriate for retirement savings and do not provide a guaranteed benefit in the same way as a defined benefit plan.

Question 3

Which of the following statements about Roth 401(k)plans is true?
I.Contributions to a Roth 401(k)plan are made with before-tax dollars.
II.Qualified distributions from a Roth 401(k)are received income-tax free.

Accepted Answer

Statement I is false. Contributions to a Roth 401(k)plan are made with after-tax dollars, not before-tax dollars.

Statement II is true. Qualified distributions from a Roth 401(k) are received income-tax free, meaning that any earnings and gains on the investment are not subject to income tax when withdrawn, as long as the distribution is made after age 59 1/2 and the account has been open for at least five years.

Question 4

Which of the following statements regarding minimum vesting standards for qualified defined benefit plans is (are)true?
I. The vesting standards apply to both employer and employee retirement contributions.
II.Employers may vest benefits more quickly than the minimum standards .

Accepted Answer

The answer of Which of the following statements regarding minimum...

Question 5

Which of the following is a common investment mistake that many retirement plan participants make?

Accepted Answer

Investing too heavily in common stock when close to retirement can be a common mistake. As individuals approach retirement, it's important to shift investments to more conservative options to protect the accumulated assets. Overexposure to a single stock or asset class can increase risk and potentially harm portfolio performance.

Question 6

Under one type of retirement plan for small businesses,the employer contributes to an IRA established for each eligible employee.Under this type of plan,the contribution limits are significantly higher than they are for traditional IRAs and Roth IRAs.This type of plan,which requires little paperwork,is called a

Accepted Answer

The description matches that of a Simplified Employee Pension (SEP) plan, which allows employers to contribute up to 25% of an employee's salary (up to a certain dollar amount) to an individual retirement account (IRA) established for the employee. This plan is easy to administer and has higher contribution limits than traditional and Roth IRAs.

Question 7

Which of the following statements about tax-deferred retirement plans in the U.S.is true?
I.Women,on average,receive lower employment-based retirement income than men.
II.One way to hedge against inflation is to invest lump-sum pension distributions in fixed-income investments.

Accepted Answer

Statement I is true according to studies on retirement income gender gaps. Statement II is not a recommended strategy for hedging against inflation as fixed-income investments may not keep up with inflation over the long term.

Quiz 17: Employee Benefits: Retirement Plans

In the context of employee benefits,the term "discrimination" refers to benefit comparisons between

Which of the following statements about Roth 401(k) plans is true? I.Contributions to a Roth 401(k) plan are made with before-tax dollars. II.Qualified distributions from a Roth 401(k) are received income-tax free.

Which of the following statements regarding minimum vesting standards for qualified defined benefit plans is (are) true? I. The vesting standards apply to both employer and employee retirement contributions. II.Employers may vest benefits more quickly than the minimum standards .

Which of the following is a common investment mistake that many retirement plan participants make?

Which of the following statements about tax-deferred retirement plans in the U.S.is true? I.Women,on average,receive lower employment-based retirement income than men. II.One way to hedge against inflation is to invest lump-sum pension distributions in fixed-income investments.