CBP Retirement and Pension Plans

Question 1

What is the primary regulatory statute governing private-sector retirement and welfare benefit plans in the United States?

Accepted Answer

ERISA

Answer

ERISA (Employee Retirement Income Security Act of 1974) sets minimum standards for most voluntarily established retirement and health plans in the private sector.

Question 2

In a defined benefit pension plan, the retirement benefit is based primarily on:

Accepted Answer

A formula using salary history and years of service

Answer

Defined benefit plans promise a specific monthly benefit at retirement calculated using a formula that typically considers years of service and final average salary.

Question 3

What is the maximum annual elective deferral limit for a 401(k) plan for employees under age 50 (2024)?

Accepted Answer

$23,000

Answer

For 2024, the IRS set the annual 401(k) elective deferral limit at $23,000 for employees under age 50.

Question 4

Which vesting schedule requires an employee to be fully vested after no more than 3 years of service?

Accepted Answer

Cliff vesting

Answer

Under cliff vesting, an employee becomes 100% vested all at once after a set period, and ERISA requires this cliff to occur no later than after 3 years of service.

Question 5

Which government agency insures defined benefit pension plan benefits up to statutory limits if a plan terminates?

Accepted Answer

PBGC

Answer

The Pension Benefit Guaranty Corporation (PBGC) insures defined benefit pension plan benefits and pays guaranteed amounts if a covered plan terminates without sufficient assets.

CBP - Certified Benefit Professional Practice Test

CBP - Certified Benefit Professional Practice Test

CBP Retirement and Pension Plans