Review Questions Module 2
DEFERRED COMPENSATION
A Benefits are based on the employee's compensation from the employer both before and after adoption of the plan
B The employer is named beneficiary if life insurance is used to fund the plan
C The employee gains a nonforfeitable right to assets set aside to fund the plan after no more than five years of service
D Benefits are paid after an employee's termination of employment without further restriction
A zero
B cash value minus basis
C fair market value of policy at time of transfer
D amount of deduction employer took prior to retirement
A Executive Bonus plan
B Excess Benefit plan
C SERP
D Top Hat plan
A purchase of insurance on Joanne's life by BWG
B withdrawal of funds from the trust
C purchase of life insurance by Joanne on her own life
D contribution by BWG to the trust
A Demand payment at any time
B Borrow from his account
C Demand payment after five years of service
D None of the above
A Contributions to qualified plans are nondeductible items for federal income tax purposes
B Qualified plans may not discriminate in favor of highly compensated employees
C Benefits under qualified plans are not subject to dollar limits
D Investment earnings in a qualified plan are tax-deferred
A Employee's terminating employment to work for a competitor
B Employee's disability
C Employee's death
D Employee's retirement
A 401(k) plan
B Any qualified plan
C Secular trust
D Deferred compensation plan
A the practice of establishing a deferred compensation plan on a handshake rather than putting it into writing
B any funding plan other than life insurance
C use of a corporate-owned non-allocated asset to meet the obligations of the deferred compensation plan
D setting aside specific assets to provide deferred compensation benefits
A qualified plan
B SERP
C rabbi trust
D secular trust
A economic benefit doctrine
B transfer for value rule
C like-kind exchange rule
D at-risk doctrine
A. Employer owns policy, beneficiary is employee
B. Employer owns policy and is the beneficiary
C. Employee owns policy and is the beneficiary
D. Employee owns policy, beneficiary is employer
A. excess benefit plan
B. executive bonus plan
C. top hat plan
D. supplemental executive retirement plan
A. SERP
B. executive bonus plan
C. rabbi trust
D. group carve out plan
A. The executive receives a lump-sum distribution
B. The executive forfeits the salary continuation benefits
C. The executive’s benefits are reduced by one-half
D. Nothing, salary continuation plan benefits are always fully vested
A. Deductibility of plan contributions
B. Whose money is used to provide the benefits
C. The executives that are covered by the plan
D. Cost recovery
A. Excess Benefit Plans
B. Executive bonus plans
C. Salary continuation plans
D. Group carve out plans
A. retirement benefits
B. medical reimbursement benefits
C. disability benefits
D. pre-retirement survivor benefits
A. Survivor benefits are always tax-free
B. Survivor benefits are subject to capital gain taxation
C. Survivor benefits are income taxable up to the policy’s cash value
D. Survivor benefits are fully taxable as income
A. A regular corporation
B. An S corporation
C. Partnership
D. Any of the above
A. Lack of a ready market in which to sell shares
B. Deferred compensation plans normally give participants vested interests
C. Restrictions on the right to sell shares
D. A desire on the part of the owners to limit ownership
A. Rabbi trust
B. Secular trust
C. Grantor retained income trust
D. Secular trust
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