1) An individual whose average three highest consecutive years of compensation i

Question

1) An individual whose average three highest consecutive years of compensation is $130,000 will have a maximum benefit payable at retirement from their defined benefit pension plan of $220,000 (2018) per year.

Question 1 options:

2) A defined benefit pension plan, which uses a flat-amount formula, pays each participant the same dollar amount during their retirement.

Question 2 options:

3) Which of the following statements is/are correct?

1. A cash balance pension plan maintains separate accounts for each of its participants as illustrated in the participant’s plan statements.


2. Within a defined benefit pension plan, the participant’s accrued benefit at any point is the participant’s present account balance.

Question 3 options:

a)

b)

c)

d)

4) Which of the following statements is/are correct?

1. If a participant terminates service with a defined benefit pension plan sponsor before becoming 100% vested, the participant’s forfeitures may be allocated to the other participants of the defined benefit pension plan.


2. The aggregate cost of a term life insurance policy included in a defined contribution plan cannot exceed 25% of the value of the defined contribution plan assets.

Question 4 options:

a)

b)

c)

d)

5) Each of the following is a characteristic of a defined benefit retirement plan EXCEPT:

Question 5 options:

a)

b)

c)

d)

Explanation / Answer

1. false

2. True

3. Option D, neither 1 nor 2 are correct

4. Option A

5. Option D, The plan assigns the risk of pre-retirement inflation, investment performance, and adequacy of retirement income to the employer not employee

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