51. Under 401(k) plans, whose responsibility is it to decide how to invest employee money contributions?
A. The employee
B. The employer
C. ERISA rules specify how investments must be made
D. The U.S. Department of Labor
Defined contribution plans put the responsibility for wise investing squarely on the shoulders of the employee.
52. Several factors affect the amount of income that will be available to an employee upon retirement. Identify the exception.
A. The age at which investments are made
B. Different historical rates of return for different investments
C. The need for diversification
D. The level of job performance
The age at which investments are made, the different historical rates of return of different investments and the need for diversification in order to counteract investment risk affect the amount of income a person will receive upon retirement.
53. The Pension Protection Act of 2006 requires defined contribution plans holding publicly traded securities to provide employees with at least _____ investment options other than employer securities.
A. three
B. four
C. two
D. five
The Pension Protection Act of 2006 requires defined contribution plans holding publicly traded securities to provide employees with at least three investment options other than employer securities.
54. A cash balance plan:
A. requires contributions from the employer and the employee.
B. cannot be rolled into an individual retirement account incase an employee changes jobs.
C. earns interest according to a predetermined rate.
D. is most generous to older employees.
A cash balance requires contributions from the employer only and is most generous to young employees who have many years ahead in which to earn interest. If employees change jobs, they generally can roll over the balance into an individual retirement account.
55. The right of an employee to a pension upon retirement is known as
A. vesting.
B. portability.
C. transfer of funds.
D. fiduciary responsibility.
The right to a pension upon retirement is referred to as vesting rights.
56. A summary plan description (SPD) must, according to ERISA, provide descriptions of all but which of the following?
A. The plan's funding
B. The plan's eligibility requirements
C. The plan's risks
D. The plan's benefit levels
A summary plan description (SPD) describes the plan's funding, eligibility requirements, and risks.
57. Which of the following is
not
a vesting right?
A. The right to a pension at retirement for vested employees.
B. Vesting must take place under one of the two minimum vesting schedules.
C. The right to a pension regardless of whether the vested employee remains with the employer until retirement.
D. The guarantee that the employer will not terminate the pension plan.
Employers can terminate pension benefits if circumstances necessitate it.
58. While the number of mandatory days of vacation in Western Europe is about 30 days, most large U.S. companies typically offer
A. 5 days.
B. 10 days.
C. 20 days.
D. 40 days.
There is no legal minimum in the United States, but 10 days is typical for large companies.
59. Which one of the following is
not
generally a characteristic of sick leave programs?
A. They are based on a "use it or lose it," no-accumulation policy.
B. They provide full salary replacement.
C. The amount of leave is often based on length of service.
D. They extend for a limited period of time, usually not exceeding 26 weeks.
Sick leave programs are based on an accumulation policy in order to prevent a "use it or lose it" mentality from developing among employees which can contribute to greater absenteeism.
60. In which one of the following countries do manufacturing workers average the most working hours per year?
A. Germany
B. Japan
C. United States
D. France
U.S. workers work 1,804 hours per year. Japan - 1,784 hours, France - 1,564 hours, and Germany - 1,436 hours.