This course explores the various retirement plan options available for employers, with particular emphasis on the options applicable to smaller companies. While many small employers may be tempted to dismiss the idea of establishing a retirement plan for their workers as too difficult and expensive, this need not be the case. This course will hopefully persuade course participants to consider the many tax advantages of retirement plans for small employers and the features of today’s qualified plans that can reduce the cost and complexity of implementing and maintaining them.
Final Exam > Results Page
final exam score:
final exam status:
100%
Question 1
Correct
Which general employee benefit technique maximizes tax advantages under the Internal Revenue Code?
Supplemental unemployment benefits
(You Answered) (Correct Answer) Qualified retirement plans
Annual increases in employee salaries
Employee welfare benefit plans
Question 2
Correct
Which of the following is not one of the three general areas related to employee benefit plans?
Employee welfare benefit plans
Employer compensation and payroll practices
Qualified retirement plans
(You Answered) (Correct Answer) Incentive salary and bonus increases
Question 3
Correct
The written plan for an employer’s qualified retirement plan must be adopted by the:
First day of the next fiscal quarter after the employer documents the plan
(You Answered) (Correct Answer) Last day of the tax year in which the employer initiates the plan
Last day of the calendar month in which the plan first enrolls participants
First day that the employer initiates contributions to fund the plan
Question 4
Correct
An employer may request a _____ for advance qualification of a new qualified retirement plan.
Preemptive ruling by the Tax Court
IRS private letter ruling
IRS revenue ruling
(You Answered) (Correct Answer) IRS determination letter
Question 5
Correct
Which of the following is not one of the Employee Plans Compliance Resolution System programs?
(You Answered) (Correct Answer) Retirement Plan Revision Program
Audit Closing Agreement Program
Self-Correction Program
All of the above are EPCRS programs.
Question 6
Correct
Under the EPCRS program, which of the following enables an employer to address a plan administrator’s diversion of assets from the plan?
Audit Closing Agreement Program
Self-Correction Program
Voluntary Correction Program
(You Answered) (Correct Answer) None of the above may be used to address diversion of plan assets by an administrator.
Question 7
Correct
Code Sec. 4975 imposes a _____ excise tax as a penalty for uncorrected, prohibited transactions of a plan involving a disqualified person.
50 percent
60 percent
75 percent
(You Answered) (Correct Answer) 100 percent
Question 8
Correct
ERISA requires the plan administrator to provide each employee-participant in a qualified retirement plan with a:
(You Answered) (Correct Answer) Summary annual report of benefits
Form 5500, Annual Return/Report of Employee Benefit Plan
Form 5300, Application for Determination for Employee Benefit Plan
None of the above is a document required for distribution to the plan’s participants.
Question 9
Correct
A defined contribution plan is defined in Code Sec. 414(i) as a qualified plan:
(You Answered) (Correct Answer) To which the employer makes discretionary contributions to accounts of employee participants
Offering a guaranteed amount of annual or monthly benefits to all employee participants
Constituting a SIMPLE-IRA
That guarantees a fixed benefit from fixed employer and employee levels of contributions
Question 10
Correct
Under a 401(k) plan, employers are generally allowed, but not required to:
(You Answered) (Correct Answer) Match the amount of an employee’s elective contribution
Offer employees an increase in salary
Permit plan participation only to highly compensated employees
Require employees to also maintain a personal IRA
Question 11
Correct
To meet nondiscrimination requirements, 401(k) plans limit the percentage of deferred wages for highly compensated employees to satisfy the:
Actuarial assumptions test
(You Answered) (Correct Answer) Actual deferral percentage test
Summary plan formula
Weighted contributions test
Question 12
Correct
What is a disadvantage for employers of sponsoring a SIMPLE IRA versus a SEP IRA as an employee retirement plan?
SIMPLE plans are more complex to administer because SEP IRAs are not subject to nondiscrimination rules.
(You Answered) (Correct Answer) SIMPLE plans may be used by employers having no more than 100 employees; SEP sponsors have no size limitations.
Employers sponsoring SIMPLE plans may not also sponsor a Roth IRA plan, but Roth plans are allowed for SEP IRA sponsors.
SIMPLE plans require employer funding to be completed each year at an earlier date than do SEP plans.
Question 13
Correct
Under the Tax Increase Prevention and Reconciliation Act of 2005, after 2009 taxpayers can avoid the income limitations for contributing to Roth IRAs by:
Opening the Roth IRA in a family member’s name
Contributing to the Roth IRA through an employer’s qualified retirement account
(You Answered) (Correct Answer) Contributing to a traditional IRA that is subsequently converted to a Roth account
Creating the account as a safe harbor 401(k) plan
Question 14
Correct
When new federal legislation necessitates updates to a qualified plan, the administrator usually:
(You Answered) (Correct Answer) Has a remedial period in which to revise the written agreement but should begin immediately to operate the plan in accordance with the new law
Has a remedial period in which to revise the written agreement and should wait until that period ends to operate the plan in accordance
Must immediately revise the written agreement and operate the plan in accordance with the new law
Does not need to make revisions or operate in accordance with the new law since the plan was already in existence when the law went into effect
Question 15
Correct
May Keogh plans adopt the structure of any type of qualified plan?
No, they cannot adopt any established plan structure.
(You Answered) (Correct Answer) Yes, they may adopt the structure of a qualified plan.
They must be similar only to IRAs.
They must be combined with a 401(k) plan.
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