CRPC Social Security and Pensions 3 — Questions and Answers
Question 1: Social Security delayed retirement credits (DRCs) accrue at what rate per month past full retirement age for those born after 1942?
- 5/12 of 1%
- 2/3 of 1% (Correct answer)
- 5/9 of 1%
- 1/2 of 1%
Correct answer: 2/3 of 1%
For those born after 1942, DRCs accrue at 2/3 of 1% per month (8% per year) past full retirement age up to age 70.
Question 2: Under ERISA, what is the maximum period a defined benefit plan may use for final average pay calculations?
- 3 consecutive years
- 5 consecutive years (Correct answer)
- 10 consecutive years
- The entire employment period
Correct answer: 5 consecutive years
ERISA limits final average pay formulas to the highest 5 consecutive years of compensation to prevent benefit manipulation.
Question 3: A client born in 1960 wants to know their Social Security full retirement age. What is it?
- 66 years
- 66 years and 6 months
- 67 years (Correct answer)
- 65 years
Correct answer: 67 years
For individuals born in 1960 or later, the full retirement age is 67 under current Social Security law.
Question 4: Which type of pension plan requires actuarial assumptions and places the investment risk on the employer?
- Defined contribution plan
- Defined benefit plan (Correct answer)
- Cash balance plan only
- Money purchase pension plan
Correct answer: Defined benefit plan
Defined benefit plans require actuarial assumptions and obligate the employer to fund promised benefits regardless of investment returns.
Question 5: A Social Security claimant has both earned income from wages and receives benefits before FRA. The 2026 annual earnings test exempt amount is $22,320. If she earns $30,320, how much is her benefit withheld?
- $8,000
- $4,000 (Correct answer)
- $2,000
- $0
Correct answer: $4,000
Earnings over the exempt amount ($30,320 - $22,320 = $8,000) are reduced $1 for every $2, so $4,000 is withheld.
Question 6: What does the term 'normal cost' mean in the context of defined benefit pension funding?
- Total unfunded liability of the plan
- Cost attributed to the current year's benefit accruals (Correct answer)
- The employer's matching contribution rate
- Actuarial gain or loss from plan investments
Correct answer: Cost attributed to the current year's benefit accruals
Normal cost represents the present value of pension benefits earned by employees during the current plan year.
Question 7: A surviving divorced spouse wants to claim Social Security survivor benefits. What is the minimum duration the marriage must have lasted?
- 5 years
- 10 years (Correct answer)
- 7 years
- 1 year
Correct answer: 10 years
A divorced spouse must have been married to the deceased worker for at least 10 years to qualify for survivor benefits.
CRPC Social Security and Pensions 3
Social Security delayed retirement credits (DRCs) accrue at what rate per month past full retirement age for those born after 1942?