Trivia Quiz On Employee Retirement Income Security Act Rules
Below is a trivia quiz on employee retirement income security act rules. It is important for everyone to know what is due to them when they go into retirement either from their employer or the government and the Act was designed to protect them. Do take the test and see if you understand all its provisions. All the best!
- 1.
The fiduciary duty provisions of ERISA are found in:
- A.
Title I
- B.
Title II
- C.
Title III
- D.
Title IV
Correct Answer
A. Title IExplanation
The fiduciary duty provisions of ERISA are contained in Title I, part 4 of ERISA.Rate this question:
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- 2.
As used in Title I of ERISA, a "pension plan" means any plan, fund, or program that:
- A.
Provides benefits to union employees following termination of employment
- B.
Provides retirement income to employees.
- C.
Results in a deferral of income until the termination of employment or beyond
- D.
B and C
Correct Answer
D. B and CExplanation
The correct answer is B and C. In Title I of ERISA, a "pension plan" is defined as any plan, fund, or program that provides retirement income to employees or results in a deferral of income until the termination of employment or beyond. This means that a pension plan can provide retirement benefits to employees and can also involve deferring income until the employee's employment is terminated or even beyond that.Rate this question:
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- 3.
As used in Title I of ERISA, a "welfare plan" means any plan, fund, or program that:
- A.
Medical benefits
- B.
Benefits in the event of sickness, accident, death or disability
- C.
Vacation benefits
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
The term "welfare plan" as defined in Title I of ERISA includes any plan, fund, or program that provides medical benefits, benefits in the event of sickness, accident, death or disability, and vacation benefits. In other words, a welfare plan encompasses all of the mentioned benefits.Rate this question:
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- 4.
True or false - For the purposes of Title I, individual employment agreements providing for post-retirement compensation generally have been held not to plan.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Individual employment agreements providing for post-retirement compensation generally have been held not to plan for the purposes of Title I. This means that such agreements are not considered as part of a formal retirement plan and therefore may not be subject to the same regulations and requirements. This distinction is important in determining the legal obligations and protections for both employers and employees in relation to post-retirement compensation.Rate this question:
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- 5.
The following is a type of plan that is maintained to provide benefits in excess of the maximum benefits permitted under Section 415 of the IRC (limits on benefits and contributions for tax-qualified retirement plans):
- A.
Excess benefit plan
- B.
Keogh plan
- C.
Non-qualifed deferred compensation plan
- D.
Cafeteria plan
Correct Answer
A. Excess benefit planExplanation
An excess benefit plan is a type of plan that is maintained to provide benefits in excess of the maximum benefits permitted under Section 415 of the IRC. This means that it allows participants to receive benefits that go beyond the limits set by the tax code for tax-qualified retirement plans. This type of plan is often used by high-income earners who want to save more for retirement and receive additional benefits that are not available through traditional retirement plans.Rate this question:
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- 6.
True or false - excess benefit plans are subject to Title I of ERISA.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Excess benefit plans are exempt from Title I uncer Section 4(b) of ERISA.Rate this question:
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- 7.
Plans that are unfunded plans maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees are sometimes called:
- A.
Keogh plans
- B.
Top hat plans
- C.
Welfare plans
- D.
Profit sharing plans
Correct Answer
B. Top hat plansExplanation
Top hat plans are a type of unfunded plan that is maintained by an employer specifically for a select group of management or highly compensated employees. These plans are designed to provide deferred compensation to these employees. Unlike other types of retirement plans, top hat plans do not require funding and are exempt from certain regulations under the Employee Retirement Income Security Act (ERISA). The term "top hat" refers to the exclusive nature of these plans, as they are typically offered only to a small group of high-level employees.Rate this question:
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- 8.
Are severance payments considered welfare plans for the purposes of Title I?
- A.
No
- B.
Yes
- C.
It depends on the amount of severance payments the plan provides for
- D.
It depends on whether the plan is administered or requires individual benefit determinations
Correct Answer
D. It depends on whether the plan is administered or requires individual benefit determinationsExplanation
Severance payments may or may not be considered welfare plans for the purposes of Title I, depending on whether the plan is administered or requires individual benefit determinations. If the plan is administered and provides for individual benefit determinations, then severance payments would be considered welfare plans. However, if the plan does not meet these criteria, then severance payments would not be considered welfare plans.Rate this question:
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- 9.
Is a policy or practice of paying terminated employees for unused vacation time a welfare plan?
- A.
Yes
- B.
No
- C.
It depends on the amount of unused vacation that employees are permitted to accrue
- D.
It depends on whether the plan is administered or requires individual determinations
Correct Answer
B. NoExplanation
The correct answer is No because a policy or practice of paying terminated employees for unused vacation time is not considered a welfare plan. A welfare plan typically refers to employee benefits such as health insurance, retirement plans, or disability coverage. Paying terminated employees for unused vacation time is a separate issue and does not fall under the category of a welfare plan.Rate this question:
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- 10.
A Keogh plan -
- A.
Covers highly compensated individuals
- B.
Covers employees
- C.
Covers self-employed individuals
- D.
Covers named executive officers
Correct Answer
C. Covers self-employed individualsExplanation
A Keogh plan is a retirement savings plan designed specifically for self-employed individuals. It allows them to contribute a portion of their income to a tax-deferred account, similar to a 401(k) plan for employees. Unlike other retirement plans, such as a 401(k) or an IRA, a Keogh plan is only available to self-employed individuals and does not cover employees or highly compensated individuals. Therefore, the correct answer is that a Keogh plan covers self-employed individuals.Rate this question:
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- 11.
A _____________ trust is established to pay benefits to employees under a nonqualified deferred compensation plan or arrangement.
Correct Answer
RabbiExplanation
The assets of a rabbi trust are available to the employer's creditors in the event of insolvency.Rate this question:
- 12.
Under ERISA, a person is a fiduciary to the extent that the person:
- A.
Exercises discretionary authority or control respecting management of a plan or management or disposition of its assets
- B.
Renders or has authority or responsilibty to render investment advice for a fee
- C.
Has discretionary authority tor responsibility in the administration of a plan
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
Under ERISA (Employee Retirement Income Security Act), a person is considered a fiduciary if they meet any of the following criteria: exercising discretionary authority or control over the management of a plan or its assets, providing investment advice for a fee, or having discretionary authority or responsibility in the administration of a plan. Therefore, the correct answer is "all of the above" because all three conditions make a person a fiduciary under ERISA.Rate this question:
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- 13.
True or false - a person's title and office govern the legal designation of a plan fiduciary.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The DOL has noted that some positions, i.e. plan administrator or trustee, may require any person who holds them to perform defined fiduciary functions.Rate this question:
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- 14.
True or false - the following are all examples of "fiduciary functions" - selecting and monitoring other plan fiduciaries, selecting and monitoring third-party service providers, exercising discretion in denying or approving benefit claims, selecting and monitoring plan investments, and interpreting plan provisions.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The given answer is true because all the examples listed - selecting and monitoring other plan fiduciaries, selecting and monitoring third-party service providers, exercising discretion in denying or approving benefit claims, selecting and monitoring plan investments, and interpreting plan provisions - are indeed examples of fiduciary functions. Fiduciary functions refer to the responsibilities and duties of a fiduciary, who is someone entrusted with managing and making decisions regarding the assets or interests of another person or entity. In the context of retirement plans, fiduciary functions involve tasks such as selecting and monitoring various aspects of the plan to ensure the best interests of the participants are upheld.Rate this question:
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- 15.
Which of the following are not "fiduciary functions"?
- A.
Deciding to establish, amend, or terminate a plan
- B.
Deciding to include certain features in a plan (designing a plan)
- C.
Deciding to provide benefits to a participant based on the terms of the plan
- D.
A and B
Correct Answer
D. A and BExplanation
The correct answer is A and B. Deciding to establish, amend, or terminate a plan and deciding to include certain features in a plan (designing a plan) are not considered "fiduciary functions." Fiduciary functions refer to the responsibilities and duties of a fiduciary, who is entrusted to act in the best interests of the plan participants and beneficiaries. However, deciding to provide benefits to a participant based on the terms of the plan is considered a fiduciary function as it involves making decisions that directly impact the participants' benefits.Rate this question:
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- 16.
True or false - attorneys and accountants who render advice to an employee benefit plan are plan fiduciaries -
- A.
True
- B.
False
- C.
It depends on the type of advice or services rendered
Correct Answer
C. It depends on the type of advice or services renderedExplanation
If, when rendering advice to a plan, professionals exercise discretionary authority over the management of a plan, disposition of plan assets, or administration of the plan, they will be designated as a fiduciary. This is generally rare.Rate this question:
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- 17.
True or false - where an employer maintains a plan, the employer's directors are fiduciaries with respect to the plan -
- A.
True
- B.
False
- C.
Only to the extent they perform fiduciary functions
Correct Answer
C. Only to the extent they perform fiduciary functionsExplanation
The correct answer is "Only to the extent they perform fiduciary functions." This means that the employer's directors are fiduciaries with respect to the plan only when they are carrying out specific fiduciary duties related to the plan. In other words, their fiduciary responsibilities are limited to the tasks and functions that directly involve the management and administration of the plan.Rate this question:
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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
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Mar 20, 2023Quiz Edited by
ProProfs Editorial Team -
Mar 15, 2010Quiz Created by
Gac1227
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