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Question 1 Which one of the following is true about employer contributions into

ID: 2624482 • Letter: Q

Question

Question 1

Which one of the following is true about employer contributions into a money purchase plan?

contributions cannot exceed 30% of an employee's compensation

in 2011, the maximum dollar amount of annual contributions to an employee's account cannot exceed $50,000

plan contributions go into a pooled account rather than into individual employee accounts

plan benefits accumulate in individual employee accounts which will be available at retirement or termination of employment

2.5 points

Question 2

Which one of the following provides the greatest amount of flexibility for employer profit sharing plan contributions?

a discretionary provision

a formula provision

a money purchase paired plan provision

a target benefit provision

2.5 points

Question 3

Qualified plans require that the purchase of life insurance be governed by what are described as "incidental limits". What is the limitation on purchasing life insurance in a profit sharing plan?

all amounts in the plan may be used

all amounts that have been in the plan for a least two years may be used

no amount of plan assets may be used

no more than 50% of plan assets may be used

a.

contributions cannot exceed 30% of an employee's compensation

b.

in 2011, the maximum dollar amount of annual contributions to an employee's account cannot exceed $50,000

c.

plan contributions go into a pooled account rather than into individual employee accounts

d.

plan benefits accumulate in individual employee accounts which will be available at retirement or termination of employment

Explanation / Answer

D

plan benefits accumulate in individual employee accounts which will be available at retirement or termination of employment

A

a discretionary provision

B

all amounts that have been in the plan for a least two years may be used

plan benefits accumulate in individual employee accounts which will be available at retirement or termination of employment

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