#1
Which regulatory body oversees retirement plans in the United States?
Internal Revenue Service (IRS)
ExplanationIRS oversees retirement plans regulation.
#2
What is the maximum annual contribution limit for an Individual Retirement Account (IRA) in 2022?
$7,000
ExplanationThe maximum annual contribution limit for IRA in 2022 is $7,000.
#3
In a defined benefit plan, how is the retirement benefit typically calculated?
Based on a predetermined formula considering factors like salary and years of service
ExplanationDefined benefit plan calculates retirement benefit based on a preset formula.
#4
What is the 'fiduciary duty' in the context of retirement plans?
The duty of plan sponsors to act in the best interest of participants
ExplanationFiduciary duty requires plan sponsors to act in participants' best interests.
#5
What is the maximum annual limit for employee contributions to a 401(k) plan in 2022?
$18,500
ExplanationThe maximum annual limit for employee contributions to a 401(k) plan in 2022 is $18,500.
#6
What is the primary purpose of a 401(k) plan in retirement planning?
Tax-advantaged retirement savings
Explanation401(k) plans facilitate tax-advantaged retirement savings.
#7
In the context of retirement plans, what does ERISA stand for?
Employee Retirement Income Security Act
ExplanationERISA stands for Employee Retirement Income Security Act.
#8
Which type of retirement plan is specifically designed for self-employed individuals and small business owners?
Simplified Employee Pension (SEP) IRA
ExplanationSEP IRA is designed for self-employed individuals and small business owners.
#9
What is the 'Required Minimum Distribution' (RMD) for traditional IRAs once an individual reaches the age of 72?
5%
ExplanationRMD for traditional IRAs at age 72 is 5%.
#10
What is the purpose of a Roth 401(k) as compared to a traditional 401(k)?
Tax-free withdrawals
ExplanationRoth 401(k) allows tax-free withdrawals compared to traditional 401(k).
#11
What role does the Employee Benefits Security Administration (EBSA) play in retirement plan regulation?
Overseeing plan investments and fiduciaries
ExplanationEBSA oversees plan investments and fiduciaries in retirement plan regulation.
#12
What is a 'vested interest' in the context of retirement benefits?
A legal right to receive certain benefits
ExplanationVested interest refers to a legal right to receive specific benefits.
#13
Which of the following events may trigger a retirement plan termination?
Merger or acquisition of the sponsoring company
ExplanationRetirement plan termination may be triggered by a merger or acquisition.
#14
What is the purpose of a QDRO (Qualified Domestic Relations Order) in the context of retirement plans?
To distribute retirement benefits in divorce proceedings
ExplanationQDRO distributes retirement benefits in divorce.
#15
Which government agency administers the Pension Benefit Guaranty Corporation (PBGC) in the United States?
Department of Labor
ExplanationPBGC is administered by the Department of Labor.
#16
What is the significance of the 'top-heavy' rule in retirement plan administration?
Ensures a fair distribution of benefits among all employees
ExplanationThe 'top-heavy' rule ensures fair benefit distribution among employees.
#17
How does a cash balance plan differ from a traditional pension plan?
Cash balance plans combine elements of defined benefit and defined contribution plans
ExplanationCash balance plans merge elements of defined benefit and defined contribution plans.