A client should be expected to state his or her retirement income objectives in terms of which of the following?

Select one:

a.

After-taxes, adjusted for assumed inflation

b.

Before-taxes, adjusted for assumed inflation

c.

After-taxes, in current dollars, discounted for future expected inflation

d.

After-taxes, in current dollars

e.

Before-taxes, in current dollars

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What is the penalty if a retiree, age 74, fails to take the required minimum distribution from a qualified plan?

Select one:

a.

10% of the account balance

b.

50% of the required minimum distribution

c.

50% of the difference between what was received and what should have been received

d.

50% of the total account balance

e.

15% of the difference between what was received and what should have been received

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Which of the following statements concerning inflation is (are) correct?

(1) When calculating the level payments required to reach a retirement fund goal, the investment rate of return is not adjusted for inflation.

(2) Some retirement plans adjust benefits to take inflation into consideration.

Select one:

a.

(1) only

b.

Neither (1) nor (2)

c.

(2) only

d.

Both (1) and (2)

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Which of the following statements concerning hardship distributions is correct?

Select one:

a.

Hardship distributions are only available for "immediate and heavy financial needs" that cannot be met from any other source.

b.

Hardship distributions received before attaining age 59 are taxed as ordinary income, but no penalty tax is imposed.

c.

If approved for a hardship distribution, a participant can receive all or part of his or her elective deferrals, including any investment income earned and accumulated on such deferrals.

d.

Hardship distributions must be paid back within five years of the date the distribution is received.

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Andy is currently age 65 and about to retire. He has accumulated $1,539,600 in his 401(k) and would like to know what amount he could withdraw at the beginning of each year if he continues to earn 6% on his investments and expects to live to age 85?

Select one:

a.

$76,980

b.

$134,229

c.

$39,484

d.

$126,631

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Early distributions from a tax-sheltered annuity avoid a 10% excise tax under which of the following conditions?

(1) The employee terminates after reaching age 55.

(2) Distribution is in the form of an annuity.

(3) Funds are for tuition for a childs college education.

(4) Disbursements are through a QDRO.

Select one:

a.

(1) and (2) only

b.

(2) and (3) only

c.

(1), (3) and (4) only

d.

(1), (2), and (4) only

e.

(1), (2), (3), and (4)

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James is employed by a large corporation with 400 employees. The corporation provides its employees with a no-cost gym membership at the local public YMCAs. The cost of the membership is $60/month which is completely paid for by James employer for all employees. How much, if any, must James include in his yearly gross income related to this fringe benefit?

Select one:

a.

$60

b.

$720

c.

$0

d.

$600

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All the following statements correctly indicate characteristics of qualified retirement plans, EXCEPT:

Select one:

a.

The employer is usually permitted to deduct the annual contribution from gross income.

b.

The employee is in receipt of no taxable income until the payout years.

c.

Both defined-benefit plans and defined-contribution plans may become qualified.

d.

Investment income is included in the employers gross income for federal income tax purposes.

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The amount that must be saved annually for retirement would logically be reduced by:

Select one:

a.

The squandering of savings and investment prior to retirement

b.

An increase in ones expected lifestyle upon retirement

c.

An increase in the rate of inflation

d.

A return on ones investments greater than anticipated

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Which of the following statements regarding the ADP and ACP tests is (are) correct?

(1) The ADP test is used to determine whether or not elective deferrals by highly-compensated employees are discriminatory.

(2) The ADP for highly-compensated employees may not exceed the ADP for non-highly-compensated employees.

(3) The ACP test is used to determine whether or not matching contributions and/or employee after-tax contributions which benefit highly-compensated employees are discriminatory.

Select one:

a.

(2) only

b.

(3) only

c.

(1) and (2) only

d.

(1) and (3) only

e.

(2) and (3) only

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All the following factors will generally influence the selection and design of an employers retirement plan, EXCEPT:

Select one:

a.

The firms financial capacity to make contributions on a regular basis

b.

The firms future requirements for investment capital

c.

The general economic outlook for the specific industry

d.

The firms cash flow and profit history

e.

The firms inventory turnover ratio

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Assume that of the 100 employees eligible for participation in G Companys qualified pension plan, 20 are highly-compensated employees, and all 20 participate. What is the minimum number of G Companys non-highly-compensated employees that must participate in G Companys qualified pension plan to meet the ratio percentage?

Select one:

a.

20

b.

40

c.

50

d.

56

e.

70

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Which of the following statements concerning a Section 457 plan set up by a nonprofit is correct?

Select one:

a.

A participant in a Section 457 plan can make catch-up contributions of $15,000 in each of the four years prior to retirement.

b.

Salary deferrals under a Section 457 plan are not subject to Social Security taxes until paid out or otherwise made available to the participant.

c.

A salary deferral agreement can be established any time during the twelve-month period of the year in which deferrals are to be made.

d.

Salary deferrals and earnings on such deferrals are the property of the employer and are subject to the claims of general creditors.

e.

Distributions must commence at age 65.

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Section 457 plans are available to all but which of the following?

Select one:

a.

Nonprofit corporations

b.

Governmental agencies

c.

Companies with less than 100 employees

d.

501(c)(3) organizations