13.3

1.

1 point

Which of the following statements is true about the Pension Benefit Guaranty Corporation (PBGC)?

It was created by the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985.

It provides a complete benefit replacement.

It guarantees healthcare benefits.

It is funded by a monthly contribution from each plan participant.

It does not allow payouts to be adjusted for cost-of-living changes.

2.

1 point

Which of the following is a defined contribution pension plan?

State-sponsored retirement plan

State second pension scheme

Supplemental benefit scheme

Profit sharing plan

Gainsharing plan

3.

1 point

Which of the following is true about defined contribution plans?

They are becoming less common.

They are more prevalent in smaller than larger companies.

They present greater administrative challenges to employers.

They require annual premium payments to the PBGC.

They shift the investment risk to the employer.

4.

1 point

_____ plans do not promise a specific benefit level for employees upon retirement. Rather, an individual account is set up for each employee with a guaranteed size of contribution.

Unspecified contribution

Defined contribution

Cash balance

Defined benefit

Term benefit

5.

1 point

A _____ plan permits employees to defer compensation on a pretax basis.

profit sharing

section 401(k)

specified retirement benefit

supplemental benefit

money purchase

6.

1 point

Under 401(k) plans, who is responsible to invest wisely?

The employee

ERISA rules specify how investments must be made

The U.S. Department of Labor

The employer

The SEC

7.

1 point

Which of the following affects the amount of income that will be available to an employee upon retirement?

The need for motivation

The number of times jobs changed

The age at which investments are made

The level of job performance

The need for power

8.

1 point

The _____ requires defined contribution plans holding publicly traded securities to provide employees with at least three investment options other than employer securities.

Consolidated Omnibus Budget Reconciliation Act of 1985

Employee Retirement Income Security Act of 1974

Pension Protection Act of 2006

Pensions Act of 2008

Health Insurance Portability and Accountability Act of 1996

9.

1 point

A cash balance plan:

earns interest according to a predetermined rate.

is most generous to older employees.

does not permit rolling over of balance into an individual retirement account in case an employee changes jobs.

requires contributions from the employer and the employee.

does not guarantee the rate of interest.

10.

1 point

The right of an employee to a pension upon retirement is known as ______.

funding right

fiduciary responsibility

portability fund

transfer of fund

vesting right