RPA 1 Practice Test 2023-solved

Those questioning the validity of the human depreciation concept of private pensions would argue that the employer should be held responsible only for the increase in the rate of aging caused by: - Answer- Correct Answer: A: Occupational hazards Module: 1Reference: Retirement Plans, Twelfth Edition, page 16.Study Guide, First Edition, page 13, Objective 3.5. Contributions to a profit sharing plan must be made on: - Answer- Correct Answer: A substantial and recurring basis Module: 5Reference: Retirement Plans, Twelfth Edition, page 93.Study Guide, First Edition, page 5, Objective 1.4. describe the tax treatment of nonqualified stock options for the employer? - Answer- Correct Answer: C: The employer gets a corporate income tax deduction for the amount of compensation income the employee realizes at the exercise of the option. Module: 12Reference: Retirement Plans, Twelfth Edition, page 275.Study Guide, First Edition, page 10, Objective 3.4. Of all of the following factors in the Black-Scholes option pricing model, which one is generally deemed to have the most relative impact on the value of the option? - Answer- Correct Answer: E: The expected volatility of the underlying stock's market price Module: 12Reference: Retirement Plans, Twelfth Edition, page 281.Study Guide, First Edition, page 15, Objective 5.4. Employees withdrawing contributions from a savings incentive match plan for employees (SIMPLE plan) individual retirement account (IRA) during the two-year period beginning on the date of initial participation are subject to a penalty tax of: - Answer- Correct Answer: E: 25 percent Module: 9Reference: Retirement Plans, Twelfth Edition, page 240.Study Guide, First Edition, page 11, Objective 3.3. 6 A retirement plan that is unfunded and maintained by an employer primarily for the purpose of providing deferred compensation for a "select group of management or highly compensated employees" is called a (n): - Answer- Correct Answer: B: Top-hat plan The limitation on exclusions for elective deferrals under 401(k) plans is: - Answer- Correct Answer: C: Indexed in increments established by the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) 8 Which of the following are types of eligible Section 457 plans that must be unfunded? - Answer- Plans maintained by nongovernmental tax-exempt organizations 9 Under a technique known as a wage-related formula, the impact of postretirement inflation on pension income is: - Answer- Measured on the basis of current wage measures to adjust benefits 10 Which Internal Revenue Code Section generally mandates that, except for certain exceptions that meet specific requirements, income from deferred compensation arrangements may no longer be deferred beyond the year in which such compensation is earned? - Answer- Correct Answer: E: Section 409A Module: 11Reference: Retirement Plans, Twelfth Edition, page 264.Study Guide, First Edition, page 21, Objective 6.3. 11 Under a percentage of earnings per year of service formula, the typical range for the percentage of earnings credited is: - Answer- Correct Answer: B: 1% to 1.25% Module: 3Reference: Retirement Plans, Twelfth Edition, page 313.Study Guide, First Edition, page 11, Objective 3.6. 12 The annual limit on deferral amounts for an ineligible Section 457 plan is: - Answer- Unlimited 13 The vesting provision of executive retirement arrangements: - Answer- E: Varies depending on the intent of the executive arrangement 14 How did the Pension Protection Act of 2006 change requirements for investment advice provided to individual retirement account (IRA) owners? - Answer- Correct Answer: C: The Act requires that fees for such advice not be contingent on the investment option chosen. Module: 10Reference: Retirement Plans, Twelfth Edition, page 216.Study Guide, First Edition, page 12, Objective 4.3. 15 The most frequently used criterion to establish participation in a supplemental executive retirement plan (SERP) is: - Answer- D: Position and management status 17 The Supreme Court ruled in Arizona Governing Committee v. Norris that: - Answer- Correct Answer: C: Life annuities under an employer-sponsored defined contribution plan must be provided on a uniform basis. Module: 5Reference: Retirement Plans, Twelfth Edition, page 105. 18 If you knew that a vendor servicing a 401(k) plan was clearing trades internally and not using an outside directed trustee, you generally could conclude that: - Answer- Correct Answer: B: The vendor was providing plan services as a bundled service provider. Module: 7Reference: Study Guide, First Edition, pages 27-28.Study Guide, First Edition, page 10, Objective 2.3. 19 Federal law defines normal retirement age to be the age specified in the plan, but it cannot occur beyond the later of: - Answer- Correct Answer: E: Age 65 or the fifth anniversary of the participant's date of initial participation Module: 3Reference: Retirement Plans, Twelfth Edition, page 308.Study Guide, First Edition, page 6, Objective 1.4. 20 In 1948 the National Labor Relations Board (NLRB) found that the provisions of retirement plans affect conditions of employment and that retirement benefits constitute: - Answer- A: Wages 21 A theory of income taxation that imposes current tax liability on taxpayers who receive something of reasonable value is known as the doctrine of: - Answer- D: Economic benefit 22 Under the Pension Protection Act of 2006, a benefit statement must be provided to a plan participant of a defined contribution plan entitled to direct plan investments: - Answer- Correct Answer: A: Once a quarterModule: 2Reference: Retirement Plans, Twelfth Edition, page 502.Study Guide, First Edition, page 17, Objective 4.2. 23 Key employees, for purposes of the top-heavy rules, include all: - Answer- Correct Answer: C: One percent owners receiving annual compensation in excess of $150,000 Module: 2Reference: Retirement Plans, Twelfth Edition, page 492. 24 In general, the aggregate amount of employer contribution allocated to a younger employee under a defined contribution plan compared to that under a defined benefit plan is: - Answer- Correct Answer: B: A higher amount Module: 4Reference: Retirement Plans, Twelfth Edition, pages 80-81.Study Guide, First Edition, page 4, Objective 1.1. 25 For all defined contribution plans, there is a uniform employer deduction limit of: - Answer- E: 25% of compensation 27 To receive tax-preferred treatment under an ineligible Section 457 plan, amounts deferred must be: - Answer- Correct Answer: D: Subject to a substantial risk of forfeiture 29 If a contribution to a profit sharing plan exceeds the maximum deductible contribution limit, the employer can carryover the excess contribution to the succeeding year, but will be subject to an excise tax on the excess contribution of: - Answer- B: 10 percent 30 An employee with four years of service participates in a retirement plan. The vesting schedule in this plan is changed by plan amendment. Under tax law, this plan participant: - Answer- D: Must be given the election to remain under the pre-amendment vesting schedule for both pre- and post-amendment benefit accruals. 31 Which of the following plans is used in conjunction with debt financing? - Answer- Correct Answer: B: An employee stock ownership plan Module: 4Reference: Retirement Plans, Twelfth Edition, page 86.Study Guide, First Edition, page 9, Objective 3.4. 32 For a distribution from a Roth IRA account to receive favorable tax treatment as a qualified distribution, how long must contributions be in the account? - Answer- C: 5 years 33 Under certain conditions, a nonworking spouse may establish an individual retirement account (IRA) using which of the following types of payments as the basis for eligibility to make contributions? - Answer- E: Earned income of a working spouse 34 In addition to current income taxation, any excess contribution to an individual retirement account (IRA) is subject to a nondeductible excise tax of: - Answer- C: 6 percent 37 Which of the following would be considered generally accepted investment theories? - Answer- II. Modern portfolio theory III. Strategic asset allocation 38 Which of the following is (are) characteristics of Section 423 employee stock purchase plans? - Answer- III. Employees who agree to have an estimated amount withheld from their pay to provide the funds with which to exercise their options at the end of an option period can decide not to exercise the optio