12. Which of the following is a basic difference between a target benefit pension plan and a money purchase pension plan? (Points : 3)

Loans are available from the respective plans. The investment risk is borne by the employee. The target benefit pension plan favors older participant-employees. The money purchase pension plan requires lower annual employer contributions.

Question 13.13. Which of the following is a basic provision of a money purchase pension plan? (Points : 3)

Forfeitures from a non-vested participant's account must be reallocated proportionately among remaining plan participants. Forfeitures from a non-vested participant's account must be applied to reduce the employer contribution to the plan. Before-tax salary reductions or elective deferrals are subject to prescribed limitations on amounts. In establishing such a plan, the employer typically agrees to make an annual contribution for each eligible employee as a fixed percentage of compensation.

Question 14.14. Which of the following statements describes a flat percentage formula for calculating retirement benefits under a defined benefit pension plan? (Points : 3)

Every employee who completes 5 years of service receives a benefit equal to 3% of earnings for each year of service. Every employee receives a retirement benefit equal to 30% of his average annual earnings. Every employee receives a retirement benefit of $1,200 per month. Every employee receives a benefit equal to $12,000 per year.

Question 15.15. What is the limit on the maximum annual deduction that may be taken for employer contributions to a traditional defined benefit pension plan in 2015? (Points : 3)

The amount required to meet minimum funding standards The lesser of 100% of employee compensation or $53,000 annually The amount necessary to provide the present value of a lump-sum benefit at age 62 The deduction for employer contributions is limited to 25% of aggregate covered compensation, considering up to $265,000 per participant