16.A defined benefit pension plan, which uses a flat-amount formula, pays each participant the same dollar amount during their retirement.

(a) True

(b) False

17.All of the following statements concerning cash balance pension plans are correct EXCEPT:

(a) The cash balance plan is generally motivated by two factors: selecting a benefit design that employees can more easily understand, and as a cost saving measure.

(b)

(c)

(d)

The cash balance plan is a defined The cash balance plan has no investment return to participants. The cash balance plan is subject requirements.

benefit plan. guaranteed annual

to minimum funding

18.Jared, age 54, earns $300,000 per year and is a participant in his employer's 401(k) plan. Ignoring the ADP Test requirements, what is the maximum amount that Jared can defer under the 401(k) plan in 2012?

(a) $17,500.

(b) $23,000.

(c) $51,000.

(d) $56,500.

19.A non-safe harbor 401(k) plan allows plan participants the opportunity to defer taxation on a portion of regular salary simply by electing to have such amounts contributed to the plan instead of receiving them in cash. Which of the following statements is/are rules that apply to 401(k) salary deferrals?

1. Salary deferral into the 401(k) plan are limited to

$17,500 for individuals younger than 50 for 2013.

2. A non-discrimination test called the actual deferral percentage test applies to salary deferral amounts.

(a) 1 only.

(b) 2 only.

(c) Both 1 and 2.

(d) Neither 1 nor 2.

20.Which of the following is (are) a defined benefit plan formula(s)?

(a) Unit benefit (a.k.a. percentage-of-earnings-per-year- of-service) formula.

(b) Flat-percentage formula. (c) Flat-amount formula.

(d) All of the above.

2l.XYZ has a noncontributory qualified profit sharing plan with

310 employees in total, 180 who are nonexcludable (40 HC and

140 NHC). The plan covers 72 NHC and 29 HC. The NHC receive

an average of 4.5% benefit and the HC receive 6 . 5%. Which of the following statements is (are) correct?

1. The XYZ company plan meets the ratio percentage test.

2. The XYZ company plan fails the average benefits test.

3. The plan must and does meet the ADP test. (a) 1 only.

(b) 2 only.

(c) Both 1 and 2. (d) 1, 2, and 3 .

22.Crowne, a manufacturing company, sponsors a qualified defined benefit pension plan covered by the PBGC and a qualified profit sharing plan. Crowne's annual covered compensation is

$1, 000, 000 and the actuary has determined that a $200 , 000

contribution must be made to the defined benefit plan for the year to meet the minimum funding requirements. If Crowne would like to contribute the maximum to their defined contribution plan for the year, how much could Crowne contribute to the defined contribution plan?

(a) $25,000 .

(b) $421 000