1 - Private Retirement Plan and Social Security Development Flashcards
Important
Why have private retirement plans grown so rapidly in the last four decades?
- increased _______
- _____ considerations
- _____ stabilization programs
- Pressures from _____
- The necessity of business firms to offer employer ______
- The desire of employers to reward employees for ______
- efficiency of the _____ savings approach
- The ______ efforts of funding agencies
- productivity
- Tax
- Wage
- unions
- retirement plans
- long periods of service
- formal group
- sales
is the assumption that the financial needs of an individual decrease after retirement valid?
Somewhat, but the assumption is overstated
The following are among key changes that EGTRRA of 2001 made to retirement plans: (7)
- Increased contribution, benefit and deduction _____
- Provided _____ for the start-up of retirement plans
- Provided tax credits to _________ employees making contributions to retirement plans
- Created greater _____ among corporate, nonprofit and governmental plans
- Created greater _______ permitted for participants 50 and over
- created the “__________ program”
- greater _______
- limits
- business credits
- lower and middle-income
- parity
- contribution limits
- qualified Roth contribution
- portability
The employer has several courses of action if an employee can no longer meet the requirements of the job. (4)
- terminate the employee
- retain in his or her current position
- retain and transfer the worker to a less demanding job
- establish a formal retirement plan to provide less productive employees with an acceptable alternative to continued employment
The __________ of 1982
- reduced the _____ of retirement plan benefits and contributions;
- brought about parity between corporate plans and plans for ______;
- introduced special restrictions on plans that are considered ______ that is, plans that appear to be heavily weighted toward key employees;
- and provided for federal income tax withholding on ____ and ____ payments.
- tax equity and Fiscal responsibility Act (TEFRA)
- maximum limits
- self-employed persons
- “top-heavy,”
- retirement and annuity
social security benefits are automatically adjusted each year for changes in _______, which maintains the real purchasing power of monthly benefits during periods of inflation.
the cost of living
can result in a reduction or loss of monthly benefits for workers who have not attained the full retirement age and have earning income above certain annual limits.
The Social Security program earnings test
_______ represented the most pervasive changes to retirement plans since the passage of ERISA.
- It imposed new _____ tests and accelerated vesting requirements for qualified plans
- changed the rules under which qualified plans could be integrated with Social Security
- lowered limits for retirement benefits that begin before the age of ___
- changed the timing and taxation of plan _______
- terminated _______ for many qualified plan participants.
- The Tax Reform Act of 1986 (TRA ‘86)
- coverage
- 65
- distributions
- IRA deductions
the most important social insurance program in the united states is the Old-Age, Survivors, and Disability Insurance program, commonly known as ______
social security
the growth of early retirement plans might best be categorized by a single concept ________
The establishment of plans was viewed as a management prerogative, and the primary motivation for the creation of plans was the economic benefit, direct or indirect, that accrued to the _______.
- business expediency.
- employer
The principal tax advantages possessed by qualified retirement plans are: (5)
(important card)
- Employer contributions can be deducted as a business expense.
- Investment income is tax-deferred.
- no employee income tax on employer contributions made on the employee’s behalf.
- employee may be in a lower income tax bracket when distributions are received.
- distributions from retirement plans may be taxed on a favorable basis.
Some of the distinguishable characteristics of social insurance programs are: (5)
- they are _______.
- generally designed to provide only a ____ of income
- pay benefits based largely on ______ rather than on individual equity.
- Their benefits are loosely related to the worker’s ______
- It is unnecessary for the programs to be ______ and they are designed to be financially self-supporting.
- compulsory
- floor
- social adequacy
- earnings
- fully funded
What are the forces at work that have restricted the growth of savings in this country? (3)
- Mass media
- constantly increasing standard of living Spending now vs saving
- High Federal taxes
A National Labor Relations Board (NLRB) ruling in 1948 that employers had a legal obligation to bargain over the terms of retirement plans facilitated labor’s drive for ___________
retirement benefits.
IMPORTANT
- Opponents of the deferred wage concept argue that some employers that pay the prevailing cash wage rate for the particular industry also provide a _______.
- Second, the deferred wage concept ignores the possible argument that the employer willingly accepts _____ to provide a retirement plan for employees.
- Third, it is sometimes argued that if retirement benefits are a form of wage, then ______ should be entitled to the part of the retirement benefit that has been earned to the date of termination.
- retirement benefit
- a lower profit margin
- terminated employees
