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1. When referring to retirement plans the term "qualified" means that the plan ____
   1. Is provided by an employer that is granted a "good employer" award by the Department of

Health & Human Services.

2. Satisfies the requirements of one or more provision(s) of the Internal Revenue Code.
3. Provides benefits only for highly compensated employees.
4. Provides benefits only for employees who are not highly compensated.

2. Under the law governing qualified pension plans, which of the following are the most restrictive age ____

and service eligibility requirements that a plan can impose on employees

1. age 25 and 4 years of service B. age 21 and 1 year of service
2. age 18 and 6 months of service D. age 21 and 3 years of service

3. Which of the following statements concerning vesting of pension benefits is correct: ____
   1. Vesting refers to the employee's right (or ownership of) the employer's contribution, or benefits

attributable to contributions, if employment terminates prior to retirement

2. Benefits vest more quickly under a defined benefit plan than under a defined contribution plan
3. Cliff vesting takes place earlier than graded vesting
4. Vesting takes place immediately when the employee qualifies for coverage under the plan

4. Which of the following statements about the taxation of qualified retirement plans is true? ____
   1. Investment income on plan assets is taxable in the year the investment income is earned.
   2. Employer contributions are considered taxable income to employees but are taxed at capital gains rates.
   3. Employer contributions are income tax deductible up to certain limits as an ordinary business expense.
   4. Distributions from qualified pension plans are received tax-free by the retiree.
   5. None of the above.

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