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Retirement and Pension Plans Flashcards

6 cards from real CBP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Retirement and Pension Plans flashcards as text

  1. Under ERISA, what is the fiduciary standard required of plan administrators?

    Answer: Prudent expert standard acting solely in participant interests

    ERISA fiduciaries must act with the care, skill, prudence, and diligence of a prudent expert and must act solely in the interest of plan participants and beneficiaries.

  2. Which type of retirement plan is most commonly associated with public school teachers and non-profit organization employees?

    Answer: 403(b)

    403(b) plans are tax-sheltered annuity plans available to employees of public schools, tax-exempt organizations, and certain ministers.

  3. What is a Required Minimum Distribution (RMD) in the context of retirement plans?

    Answer: The mandatory annual withdrawal from tax-deferred retirement accounts starting at age 73

    RMDs are the minimum amounts the IRS requires account holders to withdraw annually from tax-deferred retirement accounts beginning at age 73 under the SECURE 2.0 Act.

  4. In a cash balance plan, what represents the employee's accrued benefit?

    Answer: Hypothetical account balance with pay credits and interest credits

    Cash balance plans are defined benefit plans that express the promised benefit as a hypothetical account balance, with annual pay credits and guaranteed interest credits applied.

  5. Which non-discrimination test ensures that 401(k) employee deferral contributions do not disproportionately favor highly compensated employees?

    Answer: ADP test

    The Actual Deferral Percentage (ADP) test compares the average deferral rates of highly compensated employees to those of non-highly compensated employees to ensure equity.

  6. What is a 'safe harbor' 401(k) plan design intended to accomplish?

    Answer: Automatically satisfy ADP/ACP non-discrimination tests

    A safe harbor 401(k) plan automatically satisfies the ADP and ACP non-discrimination tests by making required employer contributions that are immediately vested.