CRC Retirement Plan Design 2

Question 1

A company wants to reward long-tenure employees more generously. Which plan design feature best accomplishes this?

Accepted Answer

Years-of-service benefit formula

Answer

A years-of-service benefit formula directly ties the benefit amount to length of employment, rewarding long-tenure employees more.

Question 2

Under IRC Section 415, what is the 2024 annual additions limit for a defined contribution plan?

Accepted Answer

$69,000

Answer

The IRC Section 415 limit on annual additions to a defined contribution plan is $69,000 for 2024 (or 100% of compensation if less).

Question 3

What is the primary purpose of a top-hat plan?

Accepted Answer

Defer compensation for a select group of highly compensated or management employees

Answer

A top-hat plan is an unfunded, nonqualified deferred compensation plan maintained for a select group of management or highly compensated employees.

Question 4

Which plan type requires the employer to fund based on actuarial calculations to meet future benefit obligations?

Accepted Answer

Defined benefit plan

Answer

Defined benefit plans require actuarial calculations to determine the funding needed to meet the promised future benefit obligations.

Question 5

A 'frozen' defined benefit plan means:

Accepted Answer

No new participants can enter and/or no additional benefits accrue

Answer

A frozen defined benefit plan stops new benefit accruals and/or new participant entry while existing accrued benefits remain intact.

(CRC) Certified Retirement Counselor Practice Test