XCEL CHAPTER 10 EXAM 2025
QUESTIONS AND ANSWERS
Which of the following is NOT a federal requirement of a qualified plan?
A. Must benefit a broad cross-section of employees
B. Employee must be able to make unlimited contributions
C. Vesting schedule must be defined
D. Employer establishes the plan - ANS Employee must be able to make unlimited
contributions
Which of the following employers is required to follow ERISA regulations?
A. A local government with 150 employees
B. A church with 30 employees
C. A local electrical supply company with 12 employees
D. A Canadian company with 300 employees working in the United States - ANS A local
electrical supply company with 12 employees
An example of a tax-qualified retirement plan would be a(n)
A. equity compensation plan
B. defined contribution plan
C. executive index plan
D. 1035 exchange plan - ANS defined contribution plan
1 @COPYRIGHT THEBRIGHT 2025/2026
, Mike has inherited his father's traditional IRA. As beneficiary, he will pay ____ taxes on any
money withdrawn.
A. estate
B. probate
C. no
D. income - ANS income
A Roth IRA owner must be at least what age in order to make tax-free withdrawals?
A. 59 1/2 and owned account for a minimum of 10 years
B. 59 1/2 and owned account for a minimum of 5 years
C. 70 1/2 and owned account for a minimum of 10 years
D. 70 1/2 and owned account for a minimum of 5 years - ANS 59 1/2 and owned account for
a minimum of 5 years
Which of the following would disqualify a company's retirement plan from receiving favorable
tax treatment?
A. Contains a vesting schedule
B. Contributions are applied with no regard to income
C. Formed for the sole benefit of employees and their beneficiaries
D. It is temporary - ANS It is temporary
When a qualified plan starts making payments to its recipient, which portion of the
distributions is taxable?
A. Principal
B. Contributions made by employee
C. Contributions made by employer
D. Gains - ANS Gains
2 @COPYRIGHT THEBRIGHT 2025/2026
QUESTIONS AND ANSWERS
Which of the following is NOT a federal requirement of a qualified plan?
A. Must benefit a broad cross-section of employees
B. Employee must be able to make unlimited contributions
C. Vesting schedule must be defined
D. Employer establishes the plan - ANS Employee must be able to make unlimited
contributions
Which of the following employers is required to follow ERISA regulations?
A. A local government with 150 employees
B. A church with 30 employees
C. A local electrical supply company with 12 employees
D. A Canadian company with 300 employees working in the United States - ANS A local
electrical supply company with 12 employees
An example of a tax-qualified retirement plan would be a(n)
A. equity compensation plan
B. defined contribution plan
C. executive index plan
D. 1035 exchange plan - ANS defined contribution plan
1 @COPYRIGHT THEBRIGHT 2025/2026
, Mike has inherited his father's traditional IRA. As beneficiary, he will pay ____ taxes on any
money withdrawn.
A. estate
B. probate
C. no
D. income - ANS income
A Roth IRA owner must be at least what age in order to make tax-free withdrawals?
A. 59 1/2 and owned account for a minimum of 10 years
B. 59 1/2 and owned account for a minimum of 5 years
C. 70 1/2 and owned account for a minimum of 10 years
D. 70 1/2 and owned account for a minimum of 5 years - ANS 59 1/2 and owned account for
a minimum of 5 years
Which of the following would disqualify a company's retirement plan from receiving favorable
tax treatment?
A. Contains a vesting schedule
B. Contributions are applied with no regard to income
C. Formed for the sole benefit of employees and their beneficiaries
D. It is temporary - ANS It is temporary
When a qualified plan starts making payments to its recipient, which portion of the
distributions is taxable?
A. Principal
B. Contributions made by employee
C. Contributions made by employer
D. Gains - ANS Gains
2 @COPYRIGHT THEBRIGHT 2025/2026
