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| 1 | |
The term ____________ is used in reference to pensions administered by some level of government. |
| | A) | insured pension fund |
| | B) | public pension fund |
| | C) | defined contribution plan |
| | D) | private pension fund |
| | E) | noninsured pension fund |
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| 2 | |
A ________________ formula would be a pension arrangement whereby the retiree receives a certain dollar amount for each year of service to the employer. |
| | A) | defined contribution |
| | B) | final pay |
| | C) | career average |
| | D) | flat benefit |
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| 3 | |
PBGC is: |
| | A) | the largest private pension fund in the U.S. |
| | B) | the largest pension plan for government employees in the U.S. |
| | C) | a government-sponsored insurance plan for pension funds |
| | D) | the government designation given to "defined contribution plans." |
| | E) | a law governing pensions in the U.S. |
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| 4 | |
With a/an _________________, an insurance company has been hired to administer the pension plan. The pension liabilities are assumed by the insurance company. |
| | A) | PGBC pension plan |
| | B) | insured plan |
| | C) | trust plan |
| | D) | fully funded |
| | E) | defined contribution plan |
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| 5 | |
This is a supplemental retirement plan offered by an employer. The employee generally will be called upon to choose how funds are to be invested. This is a/an: |
| | A) | 401k plan |
| | B) | Roth IRA |
| | C) | traditional IRA |
| | D) | defined benefit plan |
| | E) | under-funded plan |
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| 6 | |
The ________________ is a supplemental retirement plan offered by an employer, but one in which contributions are taxed in the year of contribution, rather than upon withdrawal. |
| | A) | traditional IRA |
| | B) | defined benefit plan |
| | C) | public pension plan |
| | D) | Roth 401(k) |
| | E) | Social Security plan |
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| 7 | |
Larry has just reached the point at which he is eligible for his company's pension benefits, and he'll retain rights to benefits even if he should leave the firm. We would say that Larry is now: |
| | A) | insured |
| | B) | invested |
| | C) | guaranteed |
| | D) | a defined contributor |
| | E) | vested |
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| 8 | |
With a/an_________________, assuming certain requirements are met, the amount contributed is tax deductible. |
| | A) | ordinary bank account |
| | B) | mutual fund investment |
| | C) | traditional IRA |
| | D) | Roth 401(k) |
| | E) | any pension plan |
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| 9 | |
The largest Federal government pension fund, established in 1935, is known as: |
| | A) | Social Security system |
| | B) | ERISA |
| | C) | the Roth 401(k) |
| | D) | the tradition IRA |
| | E) | the Keogh account |
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| 10 | |
When a pension plan sponsor promises the employee a particular schedule of benefits upon retirement, the pension plan is classified as a/an: |
| | A) | 401k plan |
| | B) | defined contribution plan |
| | C) | under-funded plan |
| | D) | insured pension plan |
| | E) | defined benefit plan |
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| 11 | |
With a "final pay formula" arrangement, the retiree will receive a benefit: |
| | A) | exactly equal to his/her annual salary during the last year before retirement. |
| | B) | based on the salary during a period just prior to retirement. |
| | C) | in the form of one lump sum payment. |
| | D) | based on the average annual salary over the retiree's entire employment period. |
| | E) | exactly equal to the contributions made in a period just prior to retirement. |
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| 12 | |
A key piece of Federal legislation passed in 1974, and having implications for administration of pension plans, was: |
| | A) | PBGC Act |
| | B) | ERISA |
| | C) | Keogh Act |
| | D) | Roth Act |
| | E) | Financial Services Modernization Act |
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| 13 | |
Legislation passed in 2006, and known as ______________, imposed automatic yearly increases in insurance premiums paid to the PBGC. |
| | A) | ERISA |
| | B) | the PBGC Act |
| | C) | the Financial Services Modernization Act |
| | D) | the Pension Protection Act |
| | E) | the Roth Act |
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| 14 | |
Pension funds are a large percentage of the business of __________________, and, for that reason, data for this part of the private pension business is often listed separately. |
| | A) | money market mutual funds |
| | B) | closed end investment companies |
| | C) | savings banks |
| | D) | commercial banks |
| | E) | insurance companies |
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| 15 | |
Defined contribution pension funds: |
| | A) | are increasingly dominating the private pension fund market. |
| | B) | were banned by ERISA. |
| | C) | have fallen well behind defined benefit plans, in terms of asset size. |
| | D) | are used solely by government-sponsored pension plans. |
| | E) | (b) and (c) |
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| 16 | |
Tom has an annual salary of $70,000. He has chosen to have 10% of his salary deposited in his 401(k) account. If Tom's marginal income is taxed at a rate of 31%, find the amount of Tom's tax savings, due to his 401(k) contribution. |
| | A) | $21,700 |
| | B) | $ 7,000 |
| | C) | $ 2,170 |
| | D) | $ 4,830 |
| | E) | $19,530 |
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| 17 | |
A/an _________________ is a retirement account offering tax-deferred benefits to self-employed individuals. It is administered by a financial institution, with the individual having some discretion about how the funds are invested. |
| | A) | traditional IRA |
| | B) | 401(k) |
| | C) | Keogh account |
| | D) | 403(b) |
| | E) | defined benefit plan |
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| 18 | |
Prior to passage of ______________, there were no statutory requirements forcing defined benefit fund administrators to adequately fund their pension obligations. |
| | A) | the Social Security Act |
| | B) | the Financial Services Modernization Act |
| | C) | ERISA |
| | D) | the Pension Protection Act |
| | E) | the Glass Steagall Act |
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