Ch. 15 Cash Balance Pension Plan Flashcards Preview

Employee Benefit Final > Ch. 15 Cash Balance Pension Plan > Flashcards

Flashcards in Ch. 15 Cash Balance Pension Plan Deck (27):
1

Cash balance pension plan

a qualified defined benefit plan that provides annual employer contributions at a specified rate to "hypothetical" individual accounts that are set up for each participant

2

What does the employer guarantee?

Contribution level
Minimum rate of return on each acct

3

Used when an employer has ____ employees

young

4

Used when employees are concerned with the security of their ___ ____

retirement income

5

used when the employer has a ___ workforce and most are ____-income

large; middle

6

Would it be used if the employer whats to spread admin costs over a relatively large group of employees?

yes

7

Used when the employer wants to convert an existing defined benefit plan to a plan that....

provides more attractive benefits to younger employees and may lower costs to older employees

8

Is the plan guaranteed by the PBGC?

yes

9

are there tax-deferred savings for employees?

yes

10

Some older employees may be able to use ___ year averaging

10

11

Does the employee bear investment risk?

No

12

Plan benefits are easily ___ by employer and easily ___ by employees

communicated;understood

13

3 disadvantages

1. retirement benefit may be inadequate for older plan entrants
2. complex to administer
3. employer bears investment risk which increases costs

14

There is a _____ _____ account for each participant

"hypothetical" individual

15

At least annually, the employer makes what two types of credits to a pooled single fund?

Pay credit
Interest credit

16

Pay credit formula is based on what?

compensation

17

Pay credit can be integrated with what to lower employer contributions?

social security payments

18

Interest credit

An amount of employer guaranteed investment earnings that is credited annually to each employee account

19

Does the interest credit must follow its formula?

yes

20

An employer's annual cost for the plan is determined on a ____ basis

actuarial

21

How can the costs be controlled?

by choosing the right formula for interest credit

22

The employer ____ make up the difference if the actual plan earnings fall short of the total interest credits

must

23

Do plan participants have investment choices?

no

24

Can loans against a participants account be made?

yes but seldom used due to admin problems

25

is the plan subject to ERISA?

yes

26

does the plan permit a deemed IRA?

yes

27

Some employers can receive a business tax credit of up to ____ for qualified plan startup costs

$500