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  1. QUESTION 1
  2.  
  3. Please use the case: Cheryl when responding to this question.
  4.  
  5. Code Consulting offers an "Excess SERP". What would be the unique feature in the design of this plan?
  6.  
  7.     A. 
  8. Will allow for deferral of compensation in excess of an employee-established base level
  9.  
  10.     B. 
  11. Will supplement qualified plan benefits that are limited due to IRC and ERISA limitations
  12.  
  13.     C. 
  14. Will provide benefits specifically linked to company's excess profits above established targets
  15.  
  16.     D. 
  17. Will grant a benefit equal to the excess company stock price above an established goal
  18.  
  19. 2 points  
  20.  
  21. QUESTION 2
  22.  
  23. Please use the case: Cheryl when responding to this question.
  24.  
  25. After explaining how a stock option works, Cheryl remains a bit confused by the terminology of these plans. She asks to go over the important dates in the life of a plan one more time in chronological order. How would you best respond to this question?
  26.  
  27.     A. 
  28. Grant --> Vest --> Exercise --> Sale
  29.  
  30.     B. 
  31. Vest --> Grant --> Exercise --> Sale
  32.  
  33.     C. 
  34. Exercise --> Vest --> Grant --> Sale
  35.  
  36.     D. 
  37. Vest --> Exercise -> Grant --> Sale
  38.  
  39. 2 points  
  40.  
  41. QUESTION 3
  42.  
  43. Please use the case: Cheryl when responding to this question.
  44.  
  45. Cheryl is curious to know what other types of benefit plans she may encounter in her executive career that incorporates actual company shares. All of the following would likely be included in your response to this question EXCEPT:
  46.  
  47.     A. 
  48. Stock Bonus Plan
  49.  
  50.     B. 
  51. Employee Stock Purchase Plan
  52.  
  53.     C. 
  54. Phantom Stock Plan
  55.  
  56.     D. 
  57. Restricted Stock Plan
  58.  
  59. 2 points  
  60.  
  61. QUESTION 4
  62.  
  63. Please use the case: Cheryl when responding to this question.
  64.  
  65. Which of the following choices correctly describe taxes that would be associated with the ISO option offered by Code Consulting, assuming all ISO requirements are met?
  66.  
  67. Capital gains tax on difference between exercise price and sale price
  68. Ordinary income tax on stock price at day of grant
  69. Capital gains tax on difference between sale price and market value at exercise
  70. Ordinary income tax on bargain element
  71.     A. 
  72. I only
  73.  
  74.     B. 
  75. I and II
  76.  
  77.     C. 
  78. II and III
  79.  
  80.     D. 
  81. III and IV
  82.  
  83. 2 points  
  84.  
  85. QUESTION 5
  86.  
  87. Which of the following topics should be discussed with a younger client just beginning to save for retirement?
  88.  
  89. Purchasing long term care insurance
  90. Reviewing health insurance coverage
  91. Converting funds to an income annuity
  92. Determining how much to defer to an employer-sponsored retirement plan
  93. Establishing an emergency fund
  94. Medicare planning
  95.     A. 
  96. II, IV, V
  97.  
  98.     B. 
  99. I, II, IV, V
  100.  
  101.     C. 
  102. I, III, VI
  103.  
  104.     D. 
  105. II, IV, V, VI
  106.  
  107. 2 points  
  108.  
  109. QUESTION 6
  110.  
  111. Section 401(k) plans are among the most popular forms of employer-sponsored retirement benefits. Which of the following could be plausible explanations for the popularity of this type of plan?
  112.  
  113. Plans allow higher contributions for older employees
  114. Plans allow for a combination of employee and employer contributions
  115. Plans provide a guaranteed minimum return on contributed funds
  116. Contributions may be made on a pre- or post-tax basis
  117.     A. 
  118. I only
  119.  
  120.     B. 
  121. II only
  122.  
  123.     C. 
  124. I, II, and IV
  125.  
  126.     D. 
  127. II, III, and IV
  128.  
  129. 2 points  
  130.  
  131. QUESTION 7
  132.  
  133. Which of the following individuals would be considered a fiduciary of an employer-sponsored 401(k) plan?
  134.  
  135.     A. 
  136. HR administrator in charge day-to-day operations of the plan
  137.  
  138.     B. 
  139. Financial advisor providing investment advice to the plan
  140.  
  141.     C. 
  142. Financial services company providing custody and record-keeping services
  143.  
  144.     D. 
  145. All of the above
  146.  
  147. 2 points  
  148.  
  149. QUESTION 8
  150.  
  151. All of the following are distribution options available to qualified plan, 403(b), eligible 457(b), and/or IRA beneficiaries who do not receive benefits in the form of a qualified annuity EXCEPT:
  152.  
  153.     A. 
  154. Spousal Rollover
  155.  
  156.     B. 
  157. Rollover to Inherited IRA
  158.  
  159.     C. 
  160. Annuity Factor Method
  161.  
  162.     D. 
  163. 5-Year Rule
  164.  
  165. 2 points  
  166.  
  167. QUESTION 9
  168.  
  169. Which of the following describes eligible investments that may be held in a traditional or Roth IRA account?
  170.  
  171. Any common stock or preferred stock
  172. Any open-end fund, closed-end fund, or ETF
  173. Funds or stocks selected by the IRA sponsor for inclusion as investment options for IRAs
  174. Limited partnerships and master limited partnerships
  175.     A. 
  176. II and IV
  177.  
  178.     B. 
  179. III only
  180.  
  181.     C. 
  182. I, II, and IV
  183.  
  184.     D. 
  185. I and II
  186.  
  187. 2 points  
  188.  
  189. QUESTION 10
  190.  
  191. A new client has come to you with the intention of consolidating multiple retirement accounts from her previous employers into an IRA account under your management. She has been with her current employer for 3 years contributing to a 401(k) retirement plan. All of the following types of retirement plan accounts, all from previous employers, may be rolled over to the new IRA EXCEPT:
  192.  
  193.     A. 
  194. 457(b)
  195.  
  196.     B. 
  197. SIMPLE IRA
  198.  
  199.     C. 
  200. 403(b)
  201.  
  202.     D. 
  203. 457(f)
  204.  
  205. 2 points  
  206.  
  207. QUESTION 11
  208.  
  209. Unforeseen emergencies for which a distribution will be allowed from an eligible section 457(b) plan include:
  210.  
  211. Costs of a first-time home purchase
  212. Loss of property due to casualty
  213. A sudden and unexpected illness
  214. Education expenses
  215.     A. 
  216. II, III, and IV
  217.  
  218.     B. 
  219. III only
  220.  
  221.     C. 
  222. II and III
  223.  
  224.     D. 
  225. All of the above
  226.  
  227. 2 points  
  228.  
  229. QUESTION 12
  230.  
  231. Jacqueline is required to cover 40% of the cost of her disability insurance, with her employer funding the remaining 60% of premium costs. After becoming disabled, Jacqueline receives a benefit from her group policy of $10,000 per month. How much of this monthly benefit will be included as taxable income on Jacqueline's tax return?
  232.  
  233.     A. 
  234. $4,000
  235.  
  236.     B. 
  237. $10,000
  238.  
  239.     C. 
  240. $6,000
  241.  
  242.     D. 
  243. $0
  244.  
  245. 2 points  
  246.  
  247. QUESTION 13
  248.  
  249. Which of the following plans would you recommend to a business owner who wants to reward employees when the business is successful, but is concerned with making a commitment to providing a specific amount of employer contributions each year:
  250.  
  251.     A. 
  252. Money Purchase Plan
  253.  
  254.     B. 
  255. Savings Plan
  256.  
  257.     C. 
  258. Safer Harbor 401(k) Plan
  259.  
  260.     D. 
  261. Profit-Sharing Plan
  262.  
  263. 2 points  
  264.  
  265. QUESTION 14
  266.  
  267. Which type of annuity provides returns that are linked to the performance of mutual-fund like sub-accounts?
  268.  
  269.     A. 
  270. Income Annuity
  271.  
  272.     B. 
  273. Deferred Annuity
  274.  
  275.     C. 
  276. Variable Annuity
  277.  
  278.     D. 
  279. Immediate Annuity
  280.  
  281. 2 points  
  282.  
  283. QUESTION 15
  284.  
  285. Medicare consists of four different types of coverage. Which of the following are NOT possible combinations of coverage types for an individual enrolled in this program?
  286.  
  287. Part A and B
  288. Part A, B, and C
  289. Part A, B, and D
  290. Part B and D
  291.     A. 
  292. I and II
  293.  
  294.     B. 
  295. I and III
  296.  
  297.     C. 
  298. II and IV
  299.  
  300.     D. 
  301. III and IV
  302.  
  303. 2 points  
  304.  
  305. QUESTION 16
  306.  
  307. When and how is an employee taxed on the bargain element of a non-qualified stock option:
  308.  
  309.     A. 
  310. Capital gains at time of vest
  311.  
  312.     B. 
  313. Ordinary income at time of vest
  314.  
  315.     C. 
  316. Capital gains when obtained stock is sold
  317.  
  318.     D. 
  319. Ordinary income at the time of exercise
  320.  
  321. 2 points  
  322.  
  323. QUESTION 17
  324.  
  325. All of the following are correct statements concerning the Cash Reserve Account strategy EXCEPT:
  326.  
  327.     A. 
  328. The amount of the case reserve should be equivalent to 1-3 years of required annual expenses
  329.  
  330.     B. 
  331. Funds from the cash reserve account should be withdrawn in place of portfolio distributions during a down market
  332.  
  333.     C. 
  334. The cash reserve account may consist of cash accounts and/or high quality short-term fixed income investments
  335.  
  336.     D. 
  337. In a down market the cash reserve account should be reallocated to equities in order to execute a "buy low" strategy
  338.  
  339. 2 points  
  340.  
  341. QUESTION 18
  342.  
  343. Which of the following plans provides for the most flexibility with respect to employer contributions?
  344.  
  345.     A. 
  346. SIMPLE IRA
  347.  
  348.     B. 
  349. Money Purchase Plan
  350.  
  351.     C. 
  352. Simplified Employee Pension IRA (SEP-IRA)
  353.  
  354.     D. 
  355. Defined benefit plan
  356.  
  357. 2 points  
  358.  
  359. QUESTION 19
  360.  
  361. When applying for Medicaid all of the following constitute a "countable asset" EXCEPT:
  362.  
  363. Spouse's section 401(k) plan
  364. Equity in home owned jointly with spouse
  365. Worker's own section 401(k) plan
  366. Jointly owned investment account
  367.     A. 
  368. II only
  369.  
  370.     B. 
  371. I only
  372.  
  373.     C. 
  374. II and III
  375.  
  376.     D. 
  377. II, III, and IV
  378.  
  379. 2 points  
  380.  
  381. QUESTION 20
  382.  
  383. Which of the following types of funds would be most appropriate as an investment option for an employer-sponsored defined contribution plan with participant-directed investments?
  384.  
  385. Diversified international stock fund
  386. Single country international stock fund
  387. Inverse return bear market fund
  388. Target date retirement fund
  389.     A. 
  390. I and IV
  391.  
  392.     B. 
  393. I, III, and IV
  394.  
  395.     C. 
  396. IV only
  397.  
  398.     D. 
  399. I, II, and IV
  400.  
  401. 2 points  
  402.  
  403. QUESTION 21
  404.  
  405. Which of the following either provides or can be designed to provide long term inflation adjusted income during retirement?
  406.  
  407. Cash Reserve Account
  408. Pooled or Segmented Accounts
  409. A Diversified Investment Portfolio
  410. A Laddered Bond Portfolio
  411. Annuity Income
  412.     A. 
  413. III Only
  414.  
  415.     B. 
  416. II and IV
  417.  
  418.     C. 
  419. II, III
  420.  
  421.     D. 
  422. II, III and V
  423.  
  424. 2 points  
  425.  
  426. QUESTION 22
  427.  
  428. Under which of the following conditions will an employee be able to exclude the value of key employee life insurance from his or her taxable income?
  429.  
  430.     A. 
  431. When the employee does not own shares of stock in the sponsoring company
  432.  
  433.     B. 
  434. When the amount of coverage does not exceed $50,000
  435.  
  436.     C. 
  437. When the corporation owns the policy, pays all premiums, and is the sole beneficiary
  438.  
  439.     D. 
  440. When the employee's share or premium costs is equal to or greater than the current year-over-year increase in the policy accumulation value
  441.  
  442. 2 points  
  443.  
  444. QUESTION 23
  445.  
  446. Richard, age 55, is a client of yours who is looking for a new job. He is very interested in finding a company that offers a retirement plan and would like to know which type of plan would most likely be best for him.
  447.  
  448.     A. 
  449. Money Purchase Plan
  450.  
  451.     B. 
  452. Age Based Profit Sharing Plan
  453.  
  454.     C. 
  455. Cash Balance Plan
  456.  
  457.     D. 
  458. Traditional Defined Benefit Plan
  459.  
  460. 2 points  
  461.  
  462. QUESTION 24
  463.  
  464. Elizabeth has received several types of medical care over the past month. Which type would be covered by Medicare Part B?
  465.  
  466. Outpatient hospital procedure
  467. Prescription for chronic medical condition
  468. Home health aid to assist in activities of daily living
  469. Physician office visit
  470.     A. 
  471. I and IV
  472.  
  473.     B. 
  474. II and III
  475.  
  476.     C. 
  477. I only
  478.  
  479.     D. 
  480. IV only
  481.  
  482. 2 points  
  483.  
  484. QUESTION 25
  485.  
  486. You are working as a retirement plan specialist with a local financial services company. Many of the firm's advisors, confused with respect to the number of possible retirement plans and where each one might be suitable, have asked you to summarize what features to look for in a business to indicate that a non-qualified deferred compensation plan could be a good fit. Of the following characteristics, which might you reasonably include on this list?
  487.  
  488. A closely-held employer that is recruiting executives accustomed to receiving stock grants and/or options at publicly held corporations
  489. An employer wants to recruit, retain, and reward key executives
  490. Employer wants to provide additional retirement benefits to top executives without incurring the cost of funding these benefits for all employees
  491. Employer wants to obtain additional tax deductions from employee benefit programs
  492.     A. 
  493. III and IV
  494.  
  495.     B. 
  496. II and III
  497.  
  498.     C. 
  499. I, II, and III
  500.  
  501.     D. 
  502. All of the above
  503.  
  504. 2 points  
  505.  
  506. QUESTION 26
  507.  
  508. Qualified accounts being left to named beneficiaries may be subject to which of the following taxes?
  509.  
  510. State Estate Tax
  511. State Income Tax
  512. Federal Income Tax
  513. Federal Estate Tax
  514.     A. 
  515. II and III only
  516.  
  517.     B. 
  518. III and IV only
  519.  
  520.     C. 
  521. II, III, and IV
  522.  
  523.     D. 
  524. All of the above
  525.  
  526. 2 points  
  527.  
  528. QUESTION 27
  529.  
  530. Which of the following types of retirement plans links received benefits directly to the performance of a corporation's stock price?
  531.  
  532. Phantom stock plan
  533. Supplemental bonus plan
  534. Stock appreciation rights
  535. Stock options
  536.     A. 
  537. I, III, and IV
  538.  
  539.     B. 
  540. II only
  541.  
  542.     C. 
  543. III and IV
  544.  
  545.     D. 
  546. I and IV
  547.  
  548. 2 points  
  549.  
  550. QUESTION 28
  551.  
  552. Which of the following best describes a Qualified Domestic Relations Oder (QDRO):
  553.  
  554.     A. 
  555. A court order instructing that a specified portion of a participant's qualified accounts be distributed to their spouse as part of a divorce settlement
  556.  
  557.     B. 
  558. A decree prohibiting spouses from withdrawing assets from qualified accounts during divorce proceedings
  559.  
  560.     C. 
  561. An exception from the premature distribution rules allowing a non-participant spouse to roll over any amount of the qualified account balance of a participating spouse to their own account
  562.  
  563.     D. 
  564. A court order instructing that all qualified assets be shared by divorcing spouses to meet each individual's separate needs in retirement
  565.  
  566. 2 points  
  567.  
  568. QUESTION 29
  569.  
  570. Which benefit programs included in the list below provide neither a death benefit to beneficiaries nor the accumulation of capital in an investment account for the participant?
  571.  
  572. Group Term Life Insurance Plan
  573. Profit Sharing Plan
  574. Dependent Care Assistance Plan
  575. Non-qualified Deferred Compensation Plan
  576. Short-term Disability Plan
  577.     A. 
  578. II, III, and V
  579.  
  580.     B. 
  581. III and V
  582.  
  583.     C. 
  584. II and IV
  585.  
  586.     D. 
  587. V only
  588.  
  589. 2 points  
  590.  
  591. QUESTION 30
  592.  
  593. All of the following statements concerning Required Minimum Distributions are true EXCEPT:
  594.  
  595.     A. 
  596. Distribution amounts do not remain level but increase with age
  597.  
  598.     B. 
  599. A participant with a named spousal beneficiary that is more than 10 years younger than the participant is permitted to use an alternative distribution schedule
  600.  
  601.     C. 
  602. It is possible for a participant to be required to withdraw two required distributions in one year
  603.  
  604.     D. 
  605. The beneficiary of an IRA must always follow the same distribution schedule as the original participant
  606.  
  607. 2 points  
  608.  
  609. QUESTION 31
  610.  
  611. Lori followed your advice and delayed receipt of Social Security retirement benefits to age 70, increasing her benefit amount from her FRA benefit of $1,850 per month to $2,442 per month. Her husband, Fred, receives his own benefit amount of $1,575 per month. If Lori were to pass away at age 74, after receiving benefits for only 4 years, what survivor income amount would Fred receive? For purposes of this question ignore any possible inflation adjustments.
  612.  
  613.     A. 
  614. $2,796
  615.  
  616.     B. 
  617. $3,425
  618.  
  619.     C. 
  620. $1,850
  621.  
  622.     D. 
  623. $2,442
  624.  
  625. 2 points  
  626.  
  627. QUESTION 32
  628.  
  629. Which of the following plans would be inappropriate for a client whose expressed goal is to extend tax-deferral of contributed assets for as long as possible into retirement:
  630.  
  631. Ineligible 457(f) Plan
  632. Pre-tax 401(k) Plan
  633. Roth 401(k) Plan
  634. Eligible 457(b) Plan
  635.     A. 
  636. I, II, and IV
  637.  
  638.     B. 
  639. I, III, and IV
  640.  
  641.     C. 
  642. I and III
  643.  
  644.     D. 
  645. I, II, and III
  646.  
  647. 2 points  
  648.  
  649. QUESTION 33
  650.  
  651. Qualified plans use various formulas to determine required employer funding. Which of the following are examples of methods used by one or more type of plan for determining employer contributions?
  652.  
  653. Fixed amount or percentage of compensation
  654. Recurring and substantial amount that may vary substantially from year to year
  655. Actuarial cost calculated on an annual basis
  656. Fixed amount or percentage of intended retirement income benefit
  657.     A. 
  658. I and III
  659.  
  660.     B. 
  661. I, II, and III
  662.  
  663.     C. 
  664. II, III, and IV
  665.  
  666.     D. 
  667. All of the above
  668.  
  669. 2 points  
  670.  
  671. QUESTION 34
  672.  
  673. Which of the following does NOT constitute a major advantage of a completed and funded buy-sell agreement?
  674.  
  675.     A. 
  676. Greatly reduces the likelihood of a forced liquidation of business assets at discounted prices
  677.  
  678.     B. 
  679. Identifies the intended buyers for the business at the owner's death
  680.  
  681.     C. 
  682. Provides funding for the purchase of the business by the new owners
  683.  
  684.     D. 
  685. Allows the value of the business to be determined by market conditions at the time of the owner's death
  686.  
  687. 2 points  
  688.  
  689. QUESTION 35
  690.  
  691. A junior planner working for you is preparing cash flow projections for a senior HR manager earning $160,000 per year in W-2 income. Your junior planner shows a draft projection listing FICA taxes for 2019 at $12,240. Which of the following choices would be an appropriate comment to write next to this number on the plan?
  692.  
  693.     A. 
  694. Please revise, FICA taxes are not paid on income over $132,900 (2019).
  695.  
  696.     B. 
  697. Good work on this calculation!
  698.  
  699.     C. 
  700. Please correct FICA tax rate used here to 15.3%.
  701.  
  702.     D. 
  703. Please revise, Social Security taxes are not paid on income over $132,900 (2019).
  704.  
  705. 2 points  
  706.  
  707. QUESTION 36
  708.  
  709. Which of the following are the minimum required steps in order for an eligible small business to establish a Simplified Employee Pension plan (SEP) for its employees:
  710.  
  711. Draft a plan document and obtain an IRS determination letter to approve its use
  712. Complete form 5305-SEP
  713. File form 5305-SEP with the Internal Revenue Service
  714. File form 5500 following the completion of the first plan year
  715.     A. 
  716. II only
  717.  
  718.     B. 
  719. II and III
  720.  
  721.     C. 
  722. II, III, and IV
  723.  
  724.     D. 
  725. All of the above
  726.  
  727. 2 points  
  728.  
  729. QUESTION 37
  730.  
  731. Which of the following constitutes a welfare benefit plan covered by ERISA regulations?
  732.  
  733.     A. 
  734. Benefits provided in the event of sickness, accident, or disability
  735.  
  736.     B. 
  737. Unemployment or vacation benefits
  738.  
  739.     C. 
  740. Prepaid legal services plan
  741.  
  742.     D. 
  743. All of the above
  744.  
  745. 2 points  
  746.  
  747. QUESTION 38
  748.  
  749. Which of the following types of plans would an employer most likely establish in order to allow highly compensated executives to receive the same level of net income replacement as rank-and-file employees from their defined benefit retirement pension plan:
  750.  
  751.     A. 
  752. Cross-tested defined benefit pension plan
  753.  
  754.     B. 
  755. Traditional defined benefit pension plan
  756.  
  757.     C. 
  758. Non-qualified deferred compensation plan
  759.  
  760.     D. 
  761. Supplemental executive retirement plan (SERP)
  762.  
  763. 2 points  
  764.  
  765. QUESTION 39
  766.  
  767. Which type of tax-advantaged account provides the largest number of possible investments to the account holder?
  768.  
  769.     A. 
  770. Traditional 401(k)
  771.  
  772.     B. 
  773. Traditional IRA
  774.  
  775.     C. 
  776. Defined Benefit Plan
  777.  
  778.     D. 
  779. Employee Stock Ownership Plan
  780.  
  781. 2 points  
  782.  
  783. QUESTION 40
  784.  
  785. What is the primary purpose of key employee life insurance?
  786.  
  787.     A. 
  788. To fund future benefit obligations of the company
  789.  
  790.     B. 
  791. To provide a tax-advantaged, liquid balance sheet asset for use by the corporation
  792.  
  793.     C. 
  794. To provide ongoing income to the employee's heirs in the event of his or her death
  795.  
  796.     D. 
  797. To support business continuity following the death of an important employee
  798.  
  799. 2 points  
  800.  
  801. QUESTION 41
  802.  
  803. Erin Abrams is a 35-year-old local cardiac surgeon and single mother who has come to you for advice regarding a recent disability. An injury to her hand has left her unable to perform surgeries but otherwise she is in good health. Erin is concerned that without the high income she derives from performing surgical procedures she will not be able to provide for her twin boys, who are 12 years old. She has become accustomed to her level of income working in the medical field for the past 7 years. Which of the following would be the most accurate and comprehensive description as it relates to Erin's condition with respect to Social Security disability benefits?
  804.  
  805.     A. 
  806. Erin is unlikely to qualify for Social Security disability benefits.
  807.  
  808.     B. 
  809. Erin will likely be approved for Social Security disability.
  810.  
  811.     C. 
  812. Erin will likely be approved for Social Security disability benefits, and her children will receive benefits under her earnings record as well.
  813.  
  814.     D. 
  815. Erin has not earned enough credits to qualify for disability coverage.
  816.  
  817. 2 points  
  818.  
  819. QUESTION 42
  820.  
  821. Which of the following features might you choose to highlight in a presentation to new participants on their company's 401(k)/Profit Sharing Plan?
  822.  
  823. Contributions to the plan will consist entirely of salary deferrals
  824. Employer contributions will be taxable income to employees in the year they are made
  825. Hardship withdrawals and loans may allow participants to access funds prior to retirement
  826. Each participant may determine their own individual deferral rate to the plan, within IRS limits
  827.     A. 
  828. II and III
  829.  
  830.     B. 
  831. I and II
  832.  
  833.     C. 
  834. III and IV
  835.  
  836.     D. 
  837. II, III, and IV
  838.  
  839. 2 points  
  840.  
  841. QUESTION 43
  842.  
  843. Which of the following plan entities are able to sponsor a retirement plan that is exempt from the provisions of ERSIA?
  844.  
  845.     A. 
  846. A 501(c) 3 non-profit organization
  847.  
  848.     B. 
  849. A municipal government
  850.  
  851.     C. 
  852. A foreign company sponsoring a plan for its U.S. employees
  853.  
  854.     D. 
  855. All of the above
  856.  
  857. 2 points  
  858.  
  859. QUESTION 44
  860.  
  861. Non-qualified plans do not, in general, receive the same degree of tax benefits as qualified plans. All of the following are among the tax benefits of a qualified plan EXCEPT:
  862.  
  863.     A. 
  864. For those participants who are fully vested in their benefits, employee contributions are taxed in the year they are made
  865.  
  866.     B. 
  867. No tax is owed on the plan level
  868.  
  869.     C. 
  870. Investment earnings within a plan accumulate tax-deferred, or tax-free in the case of qualifying Roth accounts
  871.  
  872.     D. 
  873. A business may deduct contributions to the plan in the year they are made, even though they may not be taxable to the benefitting employees in that year
  874.  
  875. 2 points  
  876.  
  877. QUESTION 45
  878.  
  879. Each of the following organizations would be eligible to establish a section 403(b) retirement plan EXCEPT:
  880.  
  881.     A. 
  882. Public universities
  883.  
  884.     B. 
  885. Churches
  886.  
  887.     C. 
  888. Political fundraising organizations under IRC Section 527
  889.  
  890.     D. 
  891. Non-governmental social service organizations exempt from tax under section 501(c)3
  892.  
  893. 2 points  
  894.  
  895. QUESTION 46
  896.  
  897. Your client Catherine has had a successful career as an executive at a local marketing company and is retiring early at age 56 to pursue other interests. She has accumulated assets in a traditional IRA as well as in her employer-sponsored 401(k) plan. In Catherine's situation which of the following distribution rules applies to her IRA but NOT to the accumulated pre-tax assets within her 401(k)?
  898.  
  899. No penalty will be applied to a qualifying series of substantially equal periodic payments under section 72(t).
  900. If section 72(t) is not used and no other exceptions are available, penalties will apply to any distributions taken prior to age 59½.
  901. The full amount of all distributions, even if meeting the criteria for penalty free withdrawals, will be subject to ordinary income tax.
  902. Required minimum distributions must begin by April 1st of the year following the year in which the account holder turns 70½, even if still employed.
  903.     A. 
  904. II and IV only
  905.  
  906.     B. 
  907. I and II
  908.  
  909.     C. 
  910. II only
  911.  
  912.     D. 
  913. I, II and IV
  914.  
  915. 2 points  
  916.  
  917. QUESTION 47
  918.  
  919. Please use the case: Ed and Margaret when responding to this question.
  920.  
  921. At one point in the conversation Ed comments that Margaret needs to make it to retirement, especially since they will lose all the value of her pension if she doesn't. How would you best respond to this?
  922.  
  923.     A. 
  924. Disagree and point out that Margaret's plan is required to provide a qualified pre-retirement survivor annuity if Margaret passes away.
  925.  
  926.     B. 
  927. Agree with Ed and suggest that he purchase life insurance on Margaret to make up for the lost pension if she passes away.
  928.  
  929.     C. 
  930. Disagree and point that Margaret's plan is required to provide a qualified lump sum present value payment if Margaret passes away.
  931.  
  932.     D. 
  933. Agree with Ed and suggest that Margaret should contribute only to her 403(b) plan as it is more flexible.
  934.  
  935. 2 points  
  936.  
  937. QUESTION 48
  938.  
  939. Please use the case: Ed and Margaret when responding to this question.
  940.  
  941. Ellie would like to begin saving for retirement while she's living with her parents and her expenses are lower, but is not yet eligible for her employer's 401(k) plan. What type of account would you recommend Ellie use to establish a degree of retirement savings?
  942.  
  943.     A. 
  944. Contribute to a traditional IRA
  945.  
  946.     B. 
  947. Open a Solo(k) plan account
  948.  
  949.     C. 
  950. Contribute to a Roth IRA
  951.  
  952.     D. 
  953. Fund a variable annuity
  954.  
  955. 2 points  
  956.  
  957. QUESTION 49
  958.  
  959. Please use the case: Ed and Margaret when responding to this question.
  960.  
  961. Ed has read that you can withdraw contributions to Roth accounts without a penalty and wonders if performing Roth conversions could be a good way of accessing pre-tax assets to fund Kate's graduation trip? Choose the best answer.
  962.  
  963.     A. 
  964. Yes, as Ed's IRA was opened more than five years ago converted amounts may be distributed without penalty.
  965.  
  966.     B. 
  967. No, this strategy would result in a 10% premature penalty distribution being applied.
  968.  
  969.     C. 
  970. Yes, distributions from any Roth account may be made tax-free up to the total amount contributed.
  971.  
  972.     D. 
  973. No, Ed could only access earnings from the converted account and has only three months for earnings to accumulate.
  974.  
  975. 2 points  
  976.  
  977. QUESTION 50
  978.  
  979. Please use the case: Ed and Margaret when responding to this question.
  980.  
  981. Will Margaret's parents be able to follow through on their plan to contribute to an IRA for Kate? Choose the best answer.
  982.  
  983.     A. 
  984. No, Kate is not permitted to contribute as a full-time student.
  985.  
  986.     B. 
  987. Yes, they may make a gift to Kate's IRA.
  988.  
  989.     C. 
  990. No, Kate has no current-year earned income to contribute.
  991.  
  992.     D. 
  993. Yes, but Kate will not receive a tax deduction because she has no income.
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