Chapter 3

Question 1

What are the two types of qualified plans?

Answer 1

• Pension Plan
• Profit-Sharing Plan

Qualified plans are retirement plans that meet specific IRS requirements.

Question 2

Pension Plans can have a defined benefit plan or a defined contribution plan. Name the types of defined benefit plans.

Answer 2

• Defined Benefit Pension Plan
• Cash Balance Pension Plan

Defined benefit plans provide a predetermined payout at retirement.

Question 3

Pension Plans can have a defined contribution plan. Name the types of defined contribution plans.

Answer 3

• Money Purchase Pension Plan
• Target Benefit Pension Plan

Defined contribution plans depend on contributions made to the account.

Question 4

Profit-Sharing Plans are all defined contribution plans. Name some examples of Profit-Sharing Plans.

Answer 4

• Profit Sharing Plans
• Stock Bonus Plans
• ESOPs
• 401(k) Plans
• Thrift Plans
• New Comparability Plans
• Age-Based Profit-Sharing Plans

These plans allow employees to share in the profits of the company.