A sample of multiple choice problems is provided below. Additional multiple choice problems are available at money-education.com by accessing the Student Practice Portal. 1. Which of the following is not true regarding profit-sharing plans? a. Profit-sharing plans are established and maintained by the individual employee. b. Profit-sharing plans allow employees to derive benefit from profits of the company. c. Profit-sharing plans cannot discriminate in favor of officers and shareholders. d. Profit-sharing plans provide a definite predetermined formula for allocating the contributions made to the plan among the participants and for distributing the funds accumulated under the plan. 2. Which of the following statements is true? a. Profit-sharing plans may not offer in-service withdrawals. b. Pension and profit-sharing plans are both subject to mandatory funding requirements. c. Profit-sharing plans allow annual employer contributions up to 25 percent of the employer's covered compensation. d. The legal promise of a profit-sharing plan is to pay a pension at retirement. 3. Andi, the 100 percent owner of Andi's Day Care, a C-corporation, would like to establish a profitsharing plan. Andi's Day Care's tax year ends July 31 to coincide with the school year. What is the latest day Andi can establish and contribute to the plan? a. Andi must establish and contribute to the plan by December 31 of the year in which she would like to establish the plan. b. Andi must establish the plan and make the contribution by May 15 of the following year assuming she filed the appropriate extensions. c. Andi must establish the plan by July 31 of the year in which she would like to establish the plan and contribute by December 31 . d. Andi must establish the plan by December 31 of the year in which she would like to establish the plan and contribute to the plan by April 15 of the following year. 4. Which of the following statements is true regarding CODAs? a. A 401(k) plan must be established in such a way that employers are required to contribute to the plan. b. A CODA is allowed with a profit-sharing plan, stock bonus plan, and a cash balance pension plan. c. Contributions can only be made after-tax. d. CODAs are employee self-reliant plans. 5. All of the following are advantages of a 401(k) plan except: a. Employees are permitted to shelter current income from taxation in a 401(k) plan. b. Employers can sponsor 401(k) safe harbor plans without committing to annual contributions and without creating a deferred liability. c. Earnings grow tax-deferred until distributed. d. Employers can establish 401(k) plans with minimal expense. Additional multiple choice problems are available at money.education.com by accessing the Student Practice Portal. Access requires registration of the title using the unique code at the front of the book. A sample of multiple choice problems is provided below. Additional multiple choice problems are available at money-education.com by accessing the Student Practice Portal. 1. Which of the following is not true regarding profit-sharing plans? a. Profit-sharing plans are established and maintained by the individual employee. b. Profit-sharing plans allow employees to derive benefit from profits of the company. c. Profit-sharing plans cannot discriminate in favor of officers and shareholders. d. Profit-sharing plans provide a definite predetermined formula for allocating the contributions made to the plan among the participants and for distributing the funds accumulated under the plan. 2. Which of the following statements is true? a. Profit-sharing plans may not offer in-service withdrawals. b. Pension and profit-sharing plans are both subject to mandatory funding requirements. c. Profit-sharing plans allow annual employer contributions up to 25 percent of the employer's covered compensation. d. The legal promise of a profit-sharing plan is to pay a pension at retirement. 3. Andi, the 100 percent owner of Andi's Day Care, a C-corporation, would like to establish a profitsharing plan. Andi's Day Care's tax year ends July 31 to coincide with the school year. What is the latest day Andi can establish and contribute to the plan? a. Andi must establish and contribute to the plan by December 31 of the year in which she would like to establish the plan. b. Andi must establish the plan and make the contribution by May 15 of the following year assuming she filed the appropriate extensions. c. Andi must establish the plan by July 31 of the year in which she would like to establish the plan and contribute by December 31 . d. Andi must establish the plan by December 31 of the year in which she would like to establish the plan and contribute to the plan by April 15 of the following year. 4. Which of the following statements is true regarding CODAs? a. A 401(k) plan must be established in such a way that employers are required to contribute to the plan. b. A CODA is allowed with a profit-sharing plan, stock bonus plan, and a cash balance pension plan. c. Contributions can only be made after-tax. d. CODAs are employee self-reliant plans. 5. All of the following are advantages of a 401(k) plan except: a. Employees are permitted to shelter current income from taxation in a 401(k) plan. b. Employers can sponsor 401(k) safe harbor plans without committing to annual contributions and without creating a deferred liability. c. Earnings grow tax-deferred until distributed. d. Employers can establish 401(k) plans with minimal expense. Additional multiple choice problems are available at money.education.com by accessing the Student Practice Portal. Access requires registration of the title using the unique code at the front of the book