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Retirement Plans - Design and Management Quiz

Test Your Knowledge

Retirement Plans - Design and Management (Course B2)

Instructions: Choose an answer for each question and then click on the "Get Results" button at the end of the quiz.

1. Which of the following best describes a typical post-retirement change that may impact an individual’s retirement income needs?
A. Retirees are no longer paying Social Security taxes.
B. Medicare covers 100% of health care expenses.
C. Distributions from retirement accounts are not classified as taxable income.
D. The effective income tax rate does not apply to retirees.

2. What is an income replacement target?
A. The amount of the Social Security benefit for an individual retiree
B. The amount of money needed to take the place of loss of income during one’s nonworking years
C. The amount of retirement income from all sources, including employer-sponsored retirement plans
D. The amount of income that one must earn during phased retirement

3. Which of the following is an implication of the shift in accountability for meeting retirement income needs?
A. Employers are required to offer advice on 401(k) investment options.
B. Employees need to become better informed about retirement issues.
C. Employers now offer a greater variety of defined benefits plans.
D. Plans will become more heavily funded by company stock.

4. What is a defined benefit plan?
A. A retirement plan that provides for future income from individual participant accounts based solely on the amount contributed to the account
B. A retirement plan that provides for future income although plan assets are not allocated to individual participant accounts
C. A mandatory contributory government program that generates a "safety net" level of benefits
D. A retirement plan that combines the characteristics of a traditional pension plan with those of a contemporary hybrid plan

5. What is the purpose of the Employee Retirement Income Security Act (ERISA)?
A. To create a federal agency responsible for enforcement of federal statutes
B. To ensure the security of company pension plans
C. To administer and enforce fiduciary, reporting and disclosure provisions
D. To create funding to cover under-funded company pension plans

6. Which of the following is issued by the DOL in order to clarify views expressed in advisory opinions?
A. Determination letters
B. Interpretive bulletins
C. Private letter rulings
D. IRC briefs

7. Which of the following is an advantage of defined contribution plans from an employer perspective?
A. The government imposes no limits on the contributions to DC plans.
B. The investment risk is borne equally by employer and employee.
C. The plan operation does not require an actuary.
D. The employer pays a lower premium to the PBGC.

8. Which defined contribution plan is characterized by contributions primarily in company stock?
A. Savings/thrift
B. Profit-sharing
C. SIMPLE
D. ESOP

9. Regarding traditional defined benefit plans, which of the following best describes the effect of a change in employers on an employee?
A. The more employers a person has, the higher his or her cumulative pension will be.
B. The person who remains with the same employer for his or her entire career is more likely to receive the highest benefit.
C. A change in employers has little effect on the ultimate benefits paid out under traditional defined benefit plans.
D. The person who changes employers several times in a career can maximize his or her cumulative defined benefit plan payout by remaining in each job for at least three years.

10. A defined benefit plan may exclude employees from participating until they reach which of the following?
A. Two-and-one-half years of service
B. Three years of service
C. The age of 25
D. One year of service

The Test Your Knowledge questions are intended to provide a small sample of the information covered in a particular course. Passing this test should not be considered an indicator that you also will pass the related certification exam. No portion of this document may be reproduced in any form without express written permission from WorldatWork. Copyright 2005 WorldatWork.

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