CEBS - RPA 2 EXAM Questions
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1. Premature distributions from IRAs exempt from penalty if:: Distribution occurred b/c
of IRS levy on account to pay taxes.
2. IRA qualified distributions include:: Attained age 59 1/2; disabled; died and payment made to
beneficiary or estate; pay first-time home buyer expenses, not to exceed $10k.
3. Term used to describe condition that occurs b/c of different accrual patterns
when traditional DB plan converted to cash balance plan:: Pension wear away
4. Section 409A: IRC mandate that income from deferred comp arrangements not be deferred beyond year in
which comp is earned.
5. Qualified retirement plans required to have fidelity bond covering what %?: -
10%
6. Dollar cost averaging: Involves investing the same amount of money on periodic basis, whether over- or
under-priced.
7. Vesting provisions of executive retirement arrangements:: varies depending on intent
of executive arrangement
8. Excess contribution to IRA subject to nondeductible excise tax of:: 6%
9. Nonworking spouse may establish IRA using what types of payment as basis
for eligibility?: Earned income of working spouse
10. Fiduciary liable for duly appointed and monitored investment mgr if perfor-
mance of plan below benchmark?: Not liable since investment mgmt svcs delegated
11. Typical range for % of earnings credited under % of earnings per year
formula?: 1% to 1.25%
12. Tax treatment of NQSO (NQ stock options) for ER:: ER gets corporate income tax deduction
for amount of comp income EE realizes at exercise of option.
13. Penalty for failure to make required distribution of at least correct amount
from qualified retirement plan:: Nondeductible excise tax of 50%
14. EEs w/drawing contributions from SIMPLE IRA during initial two-year period,
subject to penalty of:: 25%
15. When qualified plan hold ER securities, max amount for fidelity bond is:: In-
creased by a significant amount
16. Taxable amount received before 59 1/2 from qualified plan subject to addi-
tional penalty of:: 10%
1/8
, CEBS - RPA 2 EXAM Questions
Study online at https://quizlet.com/_db2fg0
17. Surge in investments returns on accumulated pension assets will have what
effect on projected plan costs?: Reduction effect
18. Unfunded plan maintained by ER for purpose of providing deferred comp for
a select group of mgmt or HCEs is:: Top-hat plan
19. SERP participation criterion most frequently used:: Position and mgmt status
20. Requirement of IRC integration w/ Social Security:: That the combined retirement income
does not discriminate in favor of HCEs on % basis
21. Retirement plan committee charged w/:: Making all decisions necessary regarding adminis-
tration of retirement plan
22. Highest annual return and greatest volatility?: Common stocks
23. Normal retirement age 65, but not to occur later than:: Fifth anniversary participant's
date of initial participation
24. Theory of income taxation that imposes current tax liability on taxpayers
who receive something of reasonable value:: Doctrine of economic benefit
25. Wage-related formula technique to reduce impact of postretirement infla-
tion on pension income:: Measured on the basis of current wage measures to adjust benefits.
26. If fail to comply w/ Sec 404(c): Statutory relief from fiduciary liability not available
27. Traditional DB plan (often final avg pay) or cash balance plan combined,
offering participants both options:: Minimum balance pension plan
28. SPD to be provided w/in how many days:: 90
29. Factor w/ highest impact in Black-Scholes pricing model:: Expected volatility of under-
lying stock's market price
30. Tax advantage of ISOs is that there is no regular income tax levied at grant
or exercise. However, tax applies in the following way(s):: Bargain element upon exercise
of ISO is adjustment item for individual AMT purposes and participant of ISO plan is taxed only when he/she sells the
stock.
31. Penalties assessed on fiduciary for breach or violations:: Personally liable; excise tax
of % of amount involved (15%); will NOT cause disqualification of plan.
32. Plans that allow sponsors to make contributions on discretionary basis:: -
Age-weighted profit sharing plans and New Comparability Plans.
2/8
Study online at https://quizlet.com/_db2fg0
1. Premature distributions from IRAs exempt from penalty if:: Distribution occurred b/c
of IRS levy on account to pay taxes.
2. IRA qualified distributions include:: Attained age 59 1/2; disabled; died and payment made to
beneficiary or estate; pay first-time home buyer expenses, not to exceed $10k.
3. Term used to describe condition that occurs b/c of different accrual patterns
when traditional DB plan converted to cash balance plan:: Pension wear away
4. Section 409A: IRC mandate that income from deferred comp arrangements not be deferred beyond year in
which comp is earned.
5. Qualified retirement plans required to have fidelity bond covering what %?: -
10%
6. Dollar cost averaging: Involves investing the same amount of money on periodic basis, whether over- or
under-priced.
7. Vesting provisions of executive retirement arrangements:: varies depending on intent
of executive arrangement
8. Excess contribution to IRA subject to nondeductible excise tax of:: 6%
9. Nonworking spouse may establish IRA using what types of payment as basis
for eligibility?: Earned income of working spouse
10. Fiduciary liable for duly appointed and monitored investment mgr if perfor-
mance of plan below benchmark?: Not liable since investment mgmt svcs delegated
11. Typical range for % of earnings credited under % of earnings per year
formula?: 1% to 1.25%
12. Tax treatment of NQSO (NQ stock options) for ER:: ER gets corporate income tax deduction
for amount of comp income EE realizes at exercise of option.
13. Penalty for failure to make required distribution of at least correct amount
from qualified retirement plan:: Nondeductible excise tax of 50%
14. EEs w/drawing contributions from SIMPLE IRA during initial two-year period,
subject to penalty of:: 25%
15. When qualified plan hold ER securities, max amount for fidelity bond is:: In-
creased by a significant amount
16. Taxable amount received before 59 1/2 from qualified plan subject to addi-
tional penalty of:: 10%
1/8
, CEBS - RPA 2 EXAM Questions
Study online at https://quizlet.com/_db2fg0
17. Surge in investments returns on accumulated pension assets will have what
effect on projected plan costs?: Reduction effect
18. Unfunded plan maintained by ER for purpose of providing deferred comp for
a select group of mgmt or HCEs is:: Top-hat plan
19. SERP participation criterion most frequently used:: Position and mgmt status
20. Requirement of IRC integration w/ Social Security:: That the combined retirement income
does not discriminate in favor of HCEs on % basis
21. Retirement plan committee charged w/:: Making all decisions necessary regarding adminis-
tration of retirement plan
22. Highest annual return and greatest volatility?: Common stocks
23. Normal retirement age 65, but not to occur later than:: Fifth anniversary participant's
date of initial participation
24. Theory of income taxation that imposes current tax liability on taxpayers
who receive something of reasonable value:: Doctrine of economic benefit
25. Wage-related formula technique to reduce impact of postretirement infla-
tion on pension income:: Measured on the basis of current wage measures to adjust benefits.
26. If fail to comply w/ Sec 404(c): Statutory relief from fiduciary liability not available
27. Traditional DB plan (often final avg pay) or cash balance plan combined,
offering participants both options:: Minimum balance pension plan
28. SPD to be provided w/in how many days:: 90
29. Factor w/ highest impact in Black-Scholes pricing model:: Expected volatility of under-
lying stock's market price
30. Tax advantage of ISOs is that there is no regular income tax levied at grant
or exercise. However, tax applies in the following way(s):: Bargain element upon exercise
of ISO is adjustment item for individual AMT purposes and participant of ISO plan is taxed only when he/she sells the
stock.
31. Penalties assessed on fiduciary for breach or violations:: Personally liable; excise tax
of % of amount involved (15%); will NOT cause disqualification of plan.
32. Plans that allow sponsors to make contributions on discretionary basis:: -
Age-weighted profit sharing plans and New Comparability Plans.
2/8
