1 - An employee stock ownership plan (ESOP) is a defined contribution plan that may provide the employer with which of the following advantages?

I.Increased corporate cash flow.

II. The ability to borrow money to purchase corporate stock.

III. A market for employer stock.

IV.Financial resources to expand the business.

A.I, II, III, and IV

B.III and IV

C.I and II

D.I, and II, and III

2 - Which of the following is(are) a permitted vesting schedule for a SIMPLE 401(k)?

I.3-year cliff

II.2-to-6-year graded

III. 100% immediate vesting

IV.3-to-7-year graded

A. III only

B.IV only

C.I, II, and III

D. I, II, III, and IV

3 - A qualified plan is

I.a company-sponsored retirement plan with benefits guaranteed by the Employee Retirement Income Security Act (ERISA).

II.a tax-efficient way to save for retirement.

III.only applicable for firms with 50 or more employees.

IV.considered a plan that benefits highly compensated employees only.

A.II only

B.I and III

C.II and IV

D.II, III, and IV

4 - Which of the following are minimum coverage tests for qualified retirement plans?

I.Nondiscrimination test

II.Average benefits percentage test

III.Ratio test

IV.Maximum compensation test

A.II, III and IV

B.II and III

C.I, II and III

D.I and II

5 - Several years ago, Greener Grass Company implemented a traditional defined benefit plan. According to the plan document, the employer must contribute an annual amount that will provide the employees with a specified benefit at retirement. Which of the following events would be expected to decrease the employer's annual contribution to a traditional defined benefit pension plan using a percentage for each year of service benefit formula?

I.Inflation is higher than expected.

II.Benefits are cost of living adjusted.

III.Forfeitures are higher than anticipated.

IV.The investment returns of the plan are greater than expected.

A.III and IV

B.II and IV

C.II, III and IV

D.I and III

6- Which of the following is one of the differences between defined benefit pension plans and defined contribution plans?

A. A guaranteed retirement benefit is the goal of a defined contribution plan, while a guaranteed contribution is the focus of a defined benefit pension plan

B.A defined contribution plan has a benefit limit, whereas a defined benefit pension plan has a contribution limit

C.Accounts are commingled in a defined contribution plan, while a defined benefit pension plan maintains separate accounts for each participant

D.Investment risk is borne by the employer in a defined benefit pension plan, whereas the employee bears the risk in a defined contribution plan

7 - Which of the following statements regarding plan forfeitures in a money purchase pension plan is(are) CORRECT?

I.Plan forfeitures may be used to reduce future employer contributions.

II. An employer may reallocate the plan forfeitures among the remaining plan participants, increasing their potential individual account balances but only up to the annual additions limit for each participant.

A. II only

B.Neither I nor II

C.I only

D. Both I and II

8 - Napoleon Enterprises sponsors a SIMPLE 401(k) for its employees. Under the plan, the company matches employee contributions up to 3% of compensation. Which of the following statements about Napoleon Enterprises' SIMPLE 401(k) is CORRECT?

A.Withdrawals made within 2 years of initial participation are subject to a 25% premature distribution penalty tax

B.Employees cannot make after-tax contributions to the plan

C.Napoleon Enterprises can match as little as 1% of compensation for 2 out of 5 years

D.Napoleon Enterprises' contributions must be vested using either a 3-year cliff or 2-to-6-year vesting schedule