Question 41

William Best is completing a retirement plan for a client. Which of the following sources of his clients income would William ignore when estimating clients income sources?

A - current and future asset income

B - current and future asset income

C - rent from a duplex owned by the client

D - income tax refunds

E - Social Security income

Question 42

Bardwell Manufacturing, Inc. began 15 years ago. The two co-owners now earn $300,000 per year each. Four supervisors earn $40,000 each annually and have been with the company for 10 to 11 years. Fifteen line employees earn a total of $300,000 and have been with the company from 2 months to 5 years. All employees are over age 21. The co-owners want to install a 15% money purchase plan and structure the plan in a way that maximizes their plan contributions. Which vesting schedule would be most appropriate for Bardwell?

A - 6 year graded vesting

B - 100% immediate vesting

C - 3 to 7 year vesting

D - 2 to 6 year vesting

E - 3 year cliff

Question 43

With respect to when it is appropriate to consider updating a will, all of the following are true except:

1. Whenever federal and/or state law changes.
2. Whenever the testator moves to another state.
3. Whenever the testator has a disagreement with a family member.

A - I only

B - II only

C - III only

D - I, II, and III

Question 44

Which of the following statements best describes the tax ramifications to the beneficiary of a DBO plan?

A - There will never be any tax ramifications to the beneficiary

B - The distributions will be taxed as salary to the beneficiary and subject to ordinary income tax

C - The distributions may be taxed as either ordinary income or capital gains depending on the employees contributions on the date of death

D - Payments received will be treated as gifts and taxed accordingly

Question 45

Caribon Cruise Tours has a traditional 401(k) plan for employees. Last year, payroll for employees covered under the plan was $500,000 and employee elective deferrals amounted to $100,000. Which of the following is true?

A - Caribon Cruise Tours can deduct up to $150,000 for federal income tax purposes

B - Caribon Cruise Tours can deduct no more than $125,000 for federal income tax purposes

C - employees paid income and payroll taxes on the amounts they chose to defer

D - a and c

E - a and b