Ch 7 Flashcards Preview

CPCU 556 > Ch 7 > Flashcards

Flashcards in Ch 7 Deck (14):
1

Who funds the benefits under Social Security and the Railroad Retirement Act?

Employees and employers

2

How are distributions from a traditional IRA taxed?

Fully taxed.

3

How did the stock market crash in 1929 contribute to the growth of private pensions?

Corporations received enhanced tax breaks for contributing to them.

4

What percentage of a pension plan can be invested in company stock?

10

5

Some 401K plans let employees allocate elective deferrals to a Roth 401K. What is the income tax treatment?

Deferrals are included in income and qualified distributions are entirely tax free.

6

What is the age limit for contributing to a traditional IRA?

70 1/2

7

Are there required distributions under a Roth?

No

8

Who can get SS Survivor benefits?

If currently insured (or fully):
-Dependent, unmarried children
-Spouse or ex-spouse caring for children

Only if fully insured:
-Spouse age 60 or over
-Dependent parent age 62 or older

9

If someone's full SS retirement age is 66 and they wait for years to retire, what is the benefit?

32% more benefit, permanently (8%/yr)

10

What if someone whose full retirement age is 66 retires at 62?

5/9% 36 months = 20
5/12% 12 months = 5
25% penalty!

11

Are defined benefit plans expensive to administer?

No. The administration, reporting, and disclosure agreements are minimal and inexpensive

12

This type of defined benefit plan has a benefit that is more like a defined contribution plan.

Cash balance plan.

13

This type of plan closely resembles an IRA.

SEP

14

How long is the waiting period for SS Disability benefits?

5 months