Question 1
2 out of 2 points

Please use the case: Jordan when responding to this question.

Which one of the following statements support the decision to select a Target Benefit Plan for Prudential Corp.?

Selected Answer:
D.
Employees assume the risk of pre-retirement inflation and investment performance.

Question 2
2 out of 2 points

Please use the case: Jordan when responding to this question.

Which of the following statements correctly describes an advantage of a 401(k)-Profit Sharing plan?

Selected Answer:
C.
The plan can provide for pre-tax and after-tax employee contributions, employer matching contributions, and employer profit-sharing contributions.

Question 3
2 out of 2 points

Please use the case: Jordan when responding to this question.

If Cliff Jordon and Bill Reese want to install a plan that provides maximum benefit for themselves with the most modest contributions for other employees, which of the following plans would work best?

Selected Answer:
D.
Profit-sharing plan with cross-testing allocations

Question 4
2 out of 2 points

Please use the case: Jordan when responding to this question.

If Prudential elects to establish a defined contribution plan, what is the maximum amount that could be contributed to Cliff and Bill's accounts incorporating employee deferrals, catch-up contributions, and employer contributions?

Selected Answer:
B.
$62,000

Question 5
0 out of 2 points

Please use the case: Todd when responding to this question.

At one point in the conversation Todd expresses concern that if he hires several new employees in the next few months it could substantially increase the amount he needs to contribute to the plan. What means would be available to Todd to protect against this? Choose all possible options.

Establish eligibility criteria of one year of service and 18 years of age
Establish eligibility criteria of one year of service and 21 years of age
Establish eligibility criteria of two years of service with a 2-6 year graded vesting schedule
Establish eligibility criteria of two years of service and 22 years of age
Selected Answer:
D.
All of the above

Question 6
2 out of 2 points

Please use the case: Todd when responding to this question.

Todd expresses a concern at one point in the conversation that if he makes a substantial employer contribution, his younger employees may simply withdraw the money immediately. What possible measures could be put in place to protect against this?

Retain additional contributions as a general asset of the company until the participant's retirement
Provide a loan provision allowing employees to access funds if needed without taking a distribution
Elect a graduated vesting schedule over as long a time period as possible
Provide financial education on the importance of establishing an emergency fund
Selected Answer:
D.
II, III, and IV

Question 7
0 out of 2 points

Please use the case: Todd when responding to this question.

One of the biggest drivers of Todd's success over the past years has been a consultant he has hired to develop his business. Would Todd be able to reward this consultant through participation in a qualified plan? Assume all compensation for the consultant is characterized as 1099 income. Choose all that apply.

Yes. Individuals receiving 1099 income may participate in a company's qualified plan if they meet other eligibility requirements.
No. Individuals receiving 1099 income may not participate in a company's qualified plan.
Yes. The consultant can participate but only receive employer contributions.
No. But the consultant could participate if Todd established a non-qualified plan.
Selected Answer:
d.
II only

Question 8
0 out of 2 points

Please use the case: Todd when responding to this question.

If Todd wanted to gain the ability to make additional employee and employer contributions in good years, while retaining flexibility to cut back in down years, what options would be suitable?

Establish a Savings Plan to compliment the 401(k)
Establish a Profit Sharing plan to compliment the 401(k)
Establish a traditional Defined Benefit plan to compliment the 401(k)
Establish a Cash Balance plan to compliment the 401(k)
Selected Answer:
C.
II only

Question 9
2 out of 2 points

The Deficit Reduction Act of 2005 provides for a Medicaid "look back" period of how many years?

Selected Answer:
C.
5 years

Question 10
2 out of 2 points

Which statement is true regarding general principles of investment allocation for retirement portfolios:

Selected Answer:
D.
To reduce the risk of substantial investment losses in the early years of retirement portfolio allocations should become more conservative as clients approach retirement.

Question 11
2 out of 2 points

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?

Contributions to the plan will consist entirely of salary deferrals
Employer contributions will be taxable income to employees in the year they are made
Hardship withdrawals and loans may allow participants to access funds prior to retirement
Each participant may determine their own individual deferral rate to the plan, within IRS limits
Selected Answer:
C.
III and IV

Question 12
2 out of 2 points

Which of the following are consequences arising from the death of a partner in a small partnership that may be avoided through the implementation of a properly drafted buy-sell agreement?

Accumulated goodwill may be lost in a forced liquidation
Remaining partners may experience a reduction in income
The partnership may owe taxes on the dissolution of the entity
Assets may need to be sold at discounted value
Selected Answer:
C.
I, II, and IV

Question 13
2 out of 2 points

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?

A closely-held employer that is recruiting executives accustomed to receiving stock grants and/or options at publicly held corporations
An employer wants to recruit, retain, and reward key executives
Employer wants to provide additional retirement benefits to top executives without incurring the cost of funding these benefits for all employees
Employer wants to obtain additional tax deductions from employee benefit programs
Selected Answer:
C.
I, II, and III

Question 14
2 out of 2 points

Which of the following statements are true regarding a Legal Services Plan:

Plans are required to allow covered employees to choose their own legal counsel
Employer funding of the plan is tax deductible
Plans will cover any legal need that arises for a covered employee
Benefits of the plan are included as taxable compensation to employees
Selected Answer:
A.
II and IV

Question 15
2 out of 2 points

Unforeseen emergencies for which a distribution will be allowed from an eligible section 457(b) plan include:

Costs of a first-time home purchase
Loss of property due to casualty
A sudden and unexpected illness
Education expenses
Selected Answer:
C.
II and III

Question 16
2 out of 2 points

You are speaking to Jen James regarding implementing a defined contribution plan for her business. Her business's income can be volatile from one year to the next. She has expressed an interest in adopting a Money Purchase plan as she believes it will make her company more attractive to new hires. How might you respond regarding the consideration of this plan type?

Selected Answer:
B.
Suggest a profit sharing plan as a means of providing equivalent contributions to the plan with more flexibility to accommodate variable business revenues.

Question 17
2 out of 2 points

Which of the following types of retirement plans links received benefits directly to the performance of a corporation's stock price?

Phantom stock plan
Supplemental bonus plan
Stock appreciation rights
Stock options
Selected Answer:
A.
I, III, and IV

Question 18
2 out of 2 points

Each of the following organizations would be eligible to establish a section 403(b) retirement plan EXCEPT:

Selected Answer:
C.
Political fundraising organizations under IRC Section 527

Question 19
2 out of 2 points

Barry and Pat are both approaching retirement. Full retirement age for each of them is age 66. Barry plans to file for Social Security benefits at 70 at which time Pat, who also will be 66 next year, will begin collecting a spousal benefit. In addition to Social Security Barry and Pat are currently receiving income from retirement pensions which began last year. Their current income sources are providing 50% of the couple's basic retirement income needs. With the addition of Social Security at 70 current income should meet 75% of their income needs. Other retirement assets, held in 401(k) plan accounts and IRA's, totals $873,000. Which of the following options to cover the balance of their retirement income needs would be appropriate for Barry and Pat to consider? Choose all that apply.

A four-year immediate annuity beginning at age 66
Annuitizing retirement accounts to provide lifetime income
Commencing a Systematic Withdrawal Plan (SWP) from retirement assets
Drawing down retirement assets until age 70 to lower RMD's and possibly avoid taxation of Social Security benefits
Purchasing sufficient bonds with their retirement assets to provide income between age 66 and 70, then switching to a SWP for the balance of retirement
Selected Answer:
D.
I, III, IV and V

Question 20
2 out of 2 points

Which of the following individuals would be considered a fiduciary of an employer-sponsored 401(k) plan?

Selected Answer:
D.
All of the above

Question 21
2 out of 2 points

When and how is an employee taxed on the bargain element of a non-qualified stock option:

Selected Answer:
D.
Ordinary income at the time of exercise

Question 22
2 out of 2 points

Which of the following topics should be discussed with a younger client just beginning to save for retirement?

Purchasing long term care insurance
Reviewing health insurance coverage
Converting funds to an income annuity
Determining how much to defer to an employer-sponsored retirement plan
Establishing an emergency fund
Medicare planning
Selected Answer:
A.
II, IV, V

Question 23
0 out of 2 points

Which of the following is NOT a topic that is required to be addressed when discussing a client's retirement plans:

Selected Answer:
D.
Whether clients wish to gift money to children or grandchildren.

Question 24
2 out of 2 points

What does it mean if an individual is a designated fiduciary for a retirement plan?

Selected Answer:
B.
They must act solely in the interest of plan participants and beneficiaries

Question 25
0 out of 2 points

All of the following types of executive loans are exempt from below-market rate loan tax treatment EXCEPT:

Selected Answer:
C.
Housing loans made in connection to employment-related relocation

Question 26
2 out of 2 points

Which of the following best describes a Qualified Domestic Relations Oder (QDRO):

Selected Answer:
A.
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

Question 27
2 out of 2 points

Which of the following is NOT an ERISA provision from which a properly designed non-qualified deferred compensation plan may be exempt?

Selected Answer:
C.
At-risk provision

Question 28
2 out of 2 points

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)?

No penalty will be applied to a qualifying series of substantially equal periodic payments under section 72(t).
If section 72(t) is not used and no other exceptions are available, penalties will apply to any distributions taken prior to age 59½.
The full amount of all distributions, even if meeting the criteria for penalty free withdrawals, will be subject to ordinary income tax.
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.
Selected Answer:
A.
II and IV only

Question 29
2 out of 2 points

Qualified accounts being left to named beneficiaries may be subject to which of the following taxes?

State Estate Tax
State Income Tax
Federal Income Tax
Federal Estate Tax
Selected Answer:
D.
All of the above

Question 30
0 out of 2 points

Which of the following plans are funded solely by employer contributions?

Money purchase plan
Cash balance plan
Savings Plan
Profit Sharing Plan
Selected Answer:
B.
II and IV

Question 31
2 out of 2 points

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?

Selected Answer:
A.
Erin is unlikely to qualify for Social Security disability benefits.

Question 32
2 out of 2 points

The Warm Brew coffee company established a qualified retirement plan several years ago. The plan elected to provide for pre-tax contributions only. Participation has been very good, and each year more than three quarters of the company's employees contribute to the plan, and no employee has taken a distribution or loan. Plan assets are held in various participant-directed investments, all mutual funds, with a nationally recognized financial services firm. Who will be subject to taxation on deferred income and plan investment earnings when the participating employees and sponsoring company file their prior year tax returns?

Employees will pay tax on deferred income
Employer will pay tax on deferred income
Employees will pay tax on plan earnings
Employer will pay tax on plan earnings
Selected Answer:
D.
None of the above

Question 33
2 out of 2 points

Which of the following either provides or can be designed to provide long term inflation adjusted income during retirement?

Cash Reserve Account
Pooled or Segmented Accounts
A Diversified Investment Portfolio
A Laddered Bond Portfolio
Annuity Income
Selected Answer:
D.
II, III and V

Question 34
0 out of 2 points

Joseph is a young 32-year-old sales executive whose employment status means he is not covered by an employer-sponsored plan. In 2019, Joseph closed a number of large sales and received over $300,000 in commission income. What amount is Joseph eligible to contribute to a traditional IRA in 2019 and what portion of this contribution is he able to deduct?

Selected Answer:
C.
Joseph may contribute $6,000 in 2019 but may not deduct any portion of the contribution due to income limitations

Question 35
0 out of 2 points

All of the following apply to defined benefit plans EXCEPT:

Selected Answer:
C.
In general defined benefit plans provide for greater contributions to the accounts of older and more highly compensated employees.

Question 36
2 out of 2 points

Which of the following describes eligible investments that may be held in a traditional or Roth IRA account?

Any common stock or preferred stock
Any open-end fund, closed-end fund, or ETF
Funds or stocks selected by the IRA sponsor for inclusion as investment options for IRAs
Limited partnerships and master limited partnerships
Selected Answer:
C.
I, II, and IV

Question 37
2 out of 2 points

In general the Code taxes all income and investment earnings in the year they are received and/or realized. Which of the following are exceptions to this rule providing for deferral of or exemption from taxation?

Qualifying gains on the sale of a personal residence
Investment earnings within a qualified plan account
Unrealized capital gains applicable to an unsold security
Pre-tax retirement plan contributions
Selected Answer:
D.
All of the above

Question 38
2 out of 2 points

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:

Selected Answer:
D.
457(f)

Question 39
0 out of 2 points

Social Security provides all of the following benefits to eligible workers EXCEPT:

Selected Answer:
A.
A lump sum death benefit to eligible heirs

Question 40
2 out of 2 points

Elizabeth has received several types of medical care over the past month. Which type would be covered by Medicare Part B?

Outpatient hospital procedure
Prescription for chronic medical condition
Home health aid to assist in activities of daily living
Physician office visit
Selected Answer:
A.
I and IV

Question 41
2 out of 2 points

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?

Selected Answer:
C.
$6,000

Question 42
2 out of 2 points

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:

Selected Answer:
D.
Profit-Sharing Plan

Question 43
0 out of 2 points

While non-qualified deferred compensation plans have many advantages, there are some drawbacks that any employer or employee should be aware of before deferring income to a plan. These include all of the following EXCEPT:

Selected Answer:
C.
Plans may not be suitable for S corporations or partnerships

Question 44
2 out of 2 points

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?

Group Term Life Insurance Plan
Profit Sharing Plan
Dependent Care Assistance Plan
Non-qualified Deferred Compensation Plan
Short-term Disability Plan
Selected Answer:
B.
III and V

Question 45
0 out of 2 points

Joe Paulo has decided to retire at his full retirement age. His monthly benefit will be $1,612. He married later in life, starting his family at age 52. Joe's wife, Donna is 58. They have a daughter Alison, age 14. Joe has asked you to explain what other Social Security retirement benefits will be available to his family, now that he is retiring. Which of the following is true regarding Joe's situation?

Donna is eligible to receive a benefit equal to 50% of his benefit
Alison is eligible to receive a benefit equal to 50% of his benefit
Donna is not eligible to collect a benefit until she is age 62 or older
Children are not eligible to collect a benefit after age 18 (19 if still in high school)
Selected Answer:
B.
III and IV

Question 46
2 out of 2 points

Which type of tax-advantaged account provides the largest number of possible investments to the account holder?

Selected Answer:
B.
Traditional IRA

Question 47
2 out of 2 points

Which of the following types of insurance should be addressed in a comprehensive retirement plan:

Selected Answer:
D.
All of the above

Question 48
2 out of 2 points

Which type of annuity provides returns that are linked to the performance of mutual-fund like sub-accounts?

Selected Answer:
C.
Variable Annuity

Question 49
2 out of 2 points

Which modern legislative act conflicts with the funding stipulations of retirement plans established by non-governmental tax-exempt employers established under Code Section 457?

Selected Answer:
A.
ERISA

Question 50
2 out of 2 points

Which of the following plan entities are able to sponsor a retirement plan that is exempt from the provisions of ERSIA?

Selected Answer:
B.
A municipal government

Saturday, April 20, 2019 5:32:12 PM EDT