1. Mark participates in a Section 401(k) plan maintained by his employer. His vested account balance is $25,000, and he has never taken a prior loan from the plan. What is the maximum loan amount he can take from his Section 401(k) plan? (Points : 3)

$15,000
$10,000
$12,500
$25,000

Question 2.2. Claudia’s vested Section 401(k) plan balance is $60,000. She wants to know her options for taking a loan from her plan to pay some college expenses for her daughter, Caroline. Which of the following statements is(are) CORRECT?
1 Claudia may borrow up to $30,000 from her Section 401(k) plan to pay for Caroline’s college expenses.
2 A plan loan is generally limited to one­half of the vested account balance of the plan participant, not to exceed $50,000.
3 All loan repayments for any loan must be in level installments payable at least quarterly.
4 If the rules for a plan loan are not followed, a plan loan may be deemed a taxable plan distribution and may also be subject to the 10% early withdrawal penalty. (Points : 3)

1, 2, 3 and 4
1 and 4
1 and 2
2 and 3

Question 3.3. Blake and Margaret are married, file their income taxes separately, and are both age 59½. Blake makes elective deferrals into his employer’s Section 401(k) plan. Margaret works for a nonprofit and makes elective deferrals to her employer's Section 403(b) plan. In 2015, Blake has a MAGI of $45,000 and Margaret has a MAGI of $40,000. Which of the following statements regarding Blake and Margaret and their retirement planning is NOT correct? (Points : 3)

Blake and Margaret cannot make a deductible contribution to an IRA in 2015.
Blake and Margaret may make a deductible contribution to an IRA in 2015.
Blake is an active participant.
Because Margaret participates in a Section 403(b) plan, she is considered an active participant.

Question 4.4. Mark’s financial planner has recommended a retirement plan for implementation at Mark’s business in 2015. He tells Mark the plan must cover all employees who are at least 21 and have worked for Mark for 3 of the last 5 years (part-­time counts). Contributions must be made for employees who earned at least $600 (2015) in the prior year. The plan can exclude union members if they have their own retirement plan. Which type of plan has Mark’s planner recommended? (Points : 3)

Simplified employee pension (SEP) plan
Profit­-sharing plan
SARSEP plan
SIMPLE IRA

Question 5.5. Jason recently died at age 68, leaving an IRA with a FMV of $175,000 to his wife, Mary (age 55), who was the only designated beneficiary. Mary has no IRA of her own. Which of the following statements regarding Jason’s IRA is CORRECT? (Points : 3)

Mary must receive the entire account balance within 5 years of Jason’s death.
Mary can receive distributions over her remaining single-­life expectancy, reduced by 1 each subsequent year.
Because Jason died before age 70½, any distribution Mary currently receives from the IRA will be subject to a 10% early withdrawal penalty.
Mary must immediately begin taking distributions over Jason’s remaining single-­life expectancy. Mary, as the surviving spouse, can receive distributions over her remaining life expectancy.

Question 6.6. Assume a qualified plan provides eligibility for all employees age 21 and older with 2 years of service. There are numerous key and highly compensated employees eligible for participation in this plan. What vesting schedule is required? (Points : 3)

100% vesting upon plan entry
2-­to­ 7­-year graded vesting
3­-year cliff vesting
5-­year cliff vesting

Answer rating: 100% (QA)

1 The maximum loan amount that can be taken from a Section 401 k plan is the lesser of 50 000 Half o... View the full answer