CPC Qualified Plan Compliance & Nondiscrimination Testing 2

Question 1

Under IRC Section 411, what is the maximum cliff vesting schedule permitted for employer contributions to a non-top-heavy qualified plan?

Accepted Answer

3 years

Answer

2 years

Answer

5 years

Answer

7 years

Question 2

Under the graded vesting schedule for non-top-heavy defined contribution plans, what percentage must an employee be vested after completing 4 years of service?

Accepted Answer

60%

Answer

40%

Answer

80%

Answer

100%

Question 3

For vesting purposes under ERISA, a 'year of service' is generally defined as a 12-consecutive-month period in which an employee completes at least how many hours of service?

Accepted Answer

1,000 hours

Answer

500 hours

Answer

750 hours

Answer

1,250 hours

Question 4

Under the 'rule of parity,' an employer may disregard an employee's pre-break years of service if the consecutive one-year breaks in service equal or exceed which threshold?

Accepted Answer

The greater of 5 years or pre-break years of service

Answer

The greater of 3 years or pre-break years of service

Answer

5 consecutive years regardless of prior service length

Answer

The total years of service accumulated before the break

Question 5

The '133-1/3 percent rule' for defined benefit plan accrual under IRC Section 411(b) prohibits the rate of future benefit accrual from exceeding what percentage of the rate of accrual for prior years?

Accepted Answer

133-1/3%

Answer

110%

Answer

120%

Answer

150%

Question 6

Under the fractional accrual method for defined benefit plans, an employee projected to have 20 years of service at normal retirement has earned what fraction of their projected benefit after completing 10 years?

Accepted Answer

1/2 of projected benefit

Answer

1/4 of projected benefit

Answer

1/3 of projected benefit

Answer

2/3 of projected benefit

Question 7

Under ERISA's break-in-service restoration rules, if a previously vested employee terminates, receives a distribution, and later returns to service, when must the employer restore previously forfeited employer contributions?

Accepted Answer

If the break in service is less than 5 consecutive years

Answer

If the break in service is less than 3 consecutive years

Answer

Only if the employee returns before reaching the plan's normal retirement age

Answer

Only if the employee repays the distribution with interest