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
What is the primary regulatory statute governing private-sector retirement and welfare benefit plans in the United States?
Answer: ERISA
ERISA (Employee Retirement Income Security Act of 1974) sets minimum standards for most voluntarily established retirement and health plans in the private sector.
In a defined benefit pension plan, the retirement benefit is based primarily on:
Answer: A formula using salary history and years of service
Defined benefit plans promise a specific monthly benefit at retirement calculated using a formula that typically considers years of service and final average salary.
What is the maximum annual elective deferral limit for a 401(k) plan for employees under age 50 (2024)?
Answer: $23,000
For 2024, the IRS set the annual 401(k) elective deferral limit at $23,000 for employees under age 50.
Which vesting schedule requires an employee to be fully vested after no more than 3 years of service?
Answer: Cliff vesting
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.
Which government agency insures defined benefit pension plan benefits up to statutory limits if a plan terminates?
Answer: PBGC
The Pension Benefit Guaranty Corporation (PBGC) insures defined benefit pension plan benefits and pays guaranteed amounts if a covered plan terminates without sufficient assets.
What distinguishes a 401(k) plan from a profit-sharing plan?
Answer: 401(k) plans include an elective deferral feature for employees
A 401(k) plan is a type of profit-sharing plan that includes a cash-or-deferred arrangement (CODA), allowing employees to elect to defer a portion of their compensation.