Assignment 4 Answers

Assignment 4 Answers - Age-weighted plan and DB plans...

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Age-weighted plan and DB plans review questions 1. Which one of the following is a primary objective of cross-tested plans? a. to provide higher allocations for older plan entrants b. to guarantee annual employer contributions to meet retirement income targets c. to provide maximum benefits to new/young employees d. to provide maximum benefits to highly compensated employees 2. Which one of the following would be considered a disadvantage of cross-tested plans? a. too many older rank-and-file employees cause plan costs to be lower than with alternatives b. hiring of new employees may make the plan impractical c. a plan analysis to determine whether it meets cross-testing requirements must be done at least once every five years d. such a plan may cause an employer to hire too many older employees 3. Which of the following are true about fixed-formula age-weighted profit sharing plans? (1) the percentage of compensation allocated each year to plan accounts can vary for each employee (2) the percentage of compensation allocated each year to plan accounts is fixed for each employee (3) younger employees often receive a lower percentage allocation than older employees (4) such a plan is subject to the Code’s minimum funding requirements a. (1) and (3) only b. (2) and (3) only c. (3) and (4) only d. (1) (3) and (4) only 4. Which of the following might be considered as alternatives to an age-weighted profit sharing plan while providing many of the same “targeted” benefits? (1) 401(k) plan
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Assignment 4 Answers - Age-weighted plan and DB plans...

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