Question

Question 1

1. Life insurance is viewed as favorable in defined benefit plans because it adds to the limit on deductible contributions

   True

   False

2 points

Question 2

1. Some of the advantages of using life insurance in a qualified plan includethe following except:

   		plan costs for employer are predictable
   		life insurance is considered to be a very safe investmen
   		greater rates of return on insurance cash value than alternative investments
   		retirement benefits can be guaranteed by both the insurance company and employer
   		low cost installation and service of the plan

2 points

Question 3

1. A defined benefit plan can help an older employee in a small business maximize tax-deferred savings.

   True

   False

2 points

Question 4

1. IRS sets a maximum limit on the projected annual benefit that a defined benefit plan can provide a participant.

   True

   False

2 points

Question 5

1. An employee can be covered under both a defined benefit and a defined contribution plan.

   True

   False

2 points

Question 6

1. Which type of plan has benefit levels that are guaranteed by the employer and also the Pension Benefit Guaranty Corporation (PBGC)?

   		money purchase plan
   		defined benefit plan
   		target benefit plan
   		cross tested plan
   		tax deferred annuity

2 points

Question 7

1. Regarding a cash balance plan, which of the following is (are) true?

   		the employee bears investment risk
   		each participant has a hypothetical account that the employer credits at least annually
   		the plan benefits older workers more than younger workers
   		1 and 3
   		2 and 3

2 points

Question 8

1. A traditional defined benefit plan and a cash balance plan share the following characteristics:

   		Pension Benefit Guaranty Corporation coverage
   		employer bears investment risk
   		able to use Social Security integration
   		all of these
   		only 1 and 2

2 points

Question 9

1. If an employer wants to reward an employee