CRPC Social Security and Pensions 4 — Questions and Answers
Question 1: Under Social Security, what percentage of a worker's PIA can a spouse receive if the spouse claims at their own full retirement age?
- 33%
- 50% (Correct answer)
- 75%
- 100%
Correct answer: 50%
A spouse who claims at full retirement age receives up to 50% of the worker's PIA as a spousal benefit.
Question 2: A defined benefit pension plan is described as 'top-heavy.' What minimum vesting schedule must the plan satisfy?
- 5-year cliff or 7-year graded
- 3-year cliff or 6-year graded (Correct answer)
- 2-year cliff or 5-year graded
- Immediate vesting is required
Correct answer: 3-year cliff or 6-year graded
Top-heavy plans must use accelerated vesting: 3-year cliff or 2-6 year graded vesting under IRC Section 416.
Question 3: Which Social Security taxable wage base concept is most relevant when calculating a worker's Primary Insurance Amount (PIA)?
- Average Indexed Monthly Earnings (AIME) (Correct answer)
- Average Current Earnings (ACE)
- Covered Compensation level
- Substantial Earnings threshold
Correct answer: Average Indexed Monthly Earnings (AIME)
The PIA is calculated by applying bend-point percentages to the worker's AIME, which indexes historical earnings to current wage levels.
Question 4: A pension plan terminates and is underfunded. Which federal agency insures participants' vested benefits up to a statutory maximum?
- Social Security Administration (SSA)
- Pension Benefit Guaranty Corporation (PBGC) (Correct answer)
- Department of Labor (DOL)
- Internal Revenue Service (IRS)
Correct answer: Pension Benefit Guaranty Corporation (PBGC)
The PBGC insures defined benefit pension plan benefits up to annual statutory limits when an underfunded plan terminates.
Question 5: A 72-year-old retired worker who is still receiving Social Security benefits remarries. How does remarriage affect their retirement benefits?
- Benefits are suspended until the new spouse claims
- Retirement benefits are unaffected by remarriage (Correct answer)
- Benefits are reduced by the spousal benefit of the new spouse
- Benefits stop for one year after remarriage
Correct answer: Retirement benefits are unaffected by remarriage
A worker's own Social Security retirement benefit is not affected by remarriage at any age.
Question 6: An employee participates in both a defined benefit pension and a 401(k). Under IRC Section 415, what is the combined annual benefit limit for the defined benefit plan for 2024?
- $66,000
- $275,000 (Correct answer)
- $230,000
- $265,000
Correct answer: $275,000
The Section 415(b) annual benefit limit for defined benefit plans is $275,000 for 2024, indexed for inflation.
Question 7: What happens to delayed retirement credits (DRCs) earned by a worker who dies before claiming Social Security, with respect to survivor benefits?
- DRCs are lost entirely upon death before claiming
- Survivor benefits include the DRCs earned through the month of the worker's death (Correct answer)
- Survivors receive only the base PIA without any DRCs
- DRCs transfer only if the worker was over age 70
Correct answer: Survivor benefits include the DRCs earned through the month of the worker's death
Survivor benefits are based on the deceased worker's benefit including any DRCs accrued up to the month of death.
CRPC Social Security and Pensions 4
Under Social Security, what percentage of a worker's PIA can a spouse receive if the spouse claims at their own full retirement age?