CBP Retirement and Pension Plan Management

Question 1

What is the primary benefit of a 401(k) plan for employees?

Accepted Answer

Tax-deferred growth

Answer

A 401(k) plan allows employees to save for retirement on a tax-deferred basis, meaning taxes on contributions and earnings are postponed until withdrawal.

Question 2

Which law protects employees' retirement benefits in private-sector pension plans?

Accepted Answer

ERISA

Answer

The Employee Retirement Income Security Act (ERISA) establishes minimum standards to protect participants in private-sector pension and retirement plans.

Question 3

Which type of retirement plan provides employees with a fixed monthly payment upon retirement?

Accepted Answer

Defined benefit plan

Answer

A defined benefit plan guarantees employees a specific monthly payout at retirement, based on salary and years of service.

Question 4

What is the purpose of a Roth IRA in retirement planning?

Accepted Answer

Tax-free withdrawals in retirement

Answer

A Roth IRA allows for tax-free withdrawals in retirement since contributions are made with after-tax income.

Question 5

What is a key difference between a 401(k) and a 403(b) retirement plan?

Accepted Answer

403(b) plans are designed for nonprofit employees

Answer

A 401(k) plan is offered by private companies, whereas a 403(b) plan is primarily available to employees of tax-exempt organizations like schools and nonprofits.

Uncategorized Practice Test

Uncategorized Practice Test

CBP Retirement and Pension Plan Management