7.Each of the following is a characteristic of a defined benefit retirement plan EXCEPT:

(a) The plan specifies the benefit an employee receives at retirement.

(b) The law specifies the maximum allowable benefitpayable from the plan is equal to the lesser of 100% of salary or $205,000 (2013) per year currently.

(c) The plan has less predictable costs as compared to defined contribution plans.

(d) The plan assigns the risk of pre-retirement inflation, investment performance, and adequacy of retirement income to the employee.

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8. All of the following are advantages of profit sharing plans to businesses and business owners EXCEPT:

(a) Allows discretionary contributions.

(b) Must limit withdrawal flexibility.

(c) Controls benefit costs.

(d) May provide legal discrimination in favor of older owner-employees.

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9. Which of the following is true regarding negative elections?

1.A negative election is a provision whereby the employee is deemed to have elected a specific deferral unless the employee specifically elects out of such election in writing.

2. Negative elections are no longer approved by the IRS.

3 .When an employer includes a negative election in its qualified plan, the employer must also provide 100% immediate vesting.

(a) 1 only.

(b) 1 and 3.

(c) 2 and 3.

(d) 1, 2, and 3.

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10.Bank Corp has a defined benefit plan with 60 employees. What is the minimum number of employees the defined benefit plan must cover to conform with the requirements set forth by the IRC?

(a) 24.

(b) 30 .

(c) 42 .

(d) 50.

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11. .RCM Incorporated sponsors a qualified plan that requires employees to meet one year of service and to be 21 years old before being considered eligible to enter the plan. Which of the following employees are not eligible?

1. Donald, age 18, who has worked full-time with the company

for 3 years.

2. Rachel, age 22, who has worked full-time with the company

for 6 months.

3. Randy, age 62, who has worked 500 hours per year for the past 6 years.

4. Theodore, age 35, who has worked full-time with the

company for 10 years.

(a) 4 only.

(b) 1 and 2.

(c) 3 and 4.

(d) 1, 2, and 3.

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12. .The following statements concerning retirement plan service requirements for qualified plans are correct EXCEPT:

(a) The term "year of service" refers to an employee who has worked at least 1,000 hours during a 12-month period.

(b) If an employee hired on October 5, 2012 has worked at least 1,000 hours or more by October 4, 2013, he has acquired a year of service the day after he worked his l,OOOth hour.

(c) An employer has the option of increasing the one-year of service requirement to 2 years of service.

(d) Once an employee attains the service requirement of

the plan, the employer cannot make the employee wait more than an additional six months to be considered eligible to participate in the plan.

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13. Jordan wants to retire in 15 years when he turns 65. Jordan wants to have enough money to replace 75% of his current income less what he expects to receive from Social Security at the beginning of each year. He expects to receive $20,000 per year from Social Security in today,s dollars. Jordan is conservative and wants to assume a 6% annual investment rate of return and assumes that inflation will be 4% per year. Based on his family history, Jordan expects that he will live to be 95 years old. If Jordan currently earns $100,000 per year and he expects his raises to equal the inflation rate, approximately how much does he need at retirement to fulfill his retirement goals?

(a) $1,268,887.

(b) $2,242,055.

(c) $2,285,195.

(d) $3,057,348.

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14. Utilizing the top-down approach, an individual who earns$75,000 per year as an employee for Golf Enterprises, LLC and saves $13,000 of his earnings per year towards retirement will have a wage replacement ratio equal to 82.67%.

(a) True

(b) False

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15. Which of the following statements concerning accrued benefits in qualified plans is (are) correct?

1. In a defined benefit plan, the participant's accrued

benefit at any point is the participant,s present account balance. The accrual for the specific year is the amount contributed to the plan on the employee's behalf for that year.

2. In a defined contribution plan, the accrued benefit is

the benefit earned to date, using current salary and years of service. The accrued benefit earned for the year is the additional benefit that has been earned based upon the current year's salary and service.

(a) 1 only.

(b) 2 only.

(c) Both 1 and 2.

(d) Neither 1 nor 2.

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All the questions are multiple choice and True or False

Thanks