CRPC Full Vocabulary Test with A Graded Solutions
Efficient market hypothesis - Answer-States that, at least for US equities markets, bargains cannot be found on any consistent basis. Rather, all important information about a company's performance and prospects is already reflected in the market p...
CRPC Full Vocabulary Test
with A Graded Solutions
Efficient market hypothesis - Answer-States that, at least for US equities markets,
bargains cannot be found on any consistent basis. Rather, all important information
about a company's performance and prospects is already reflected in the market prices
of its shares.
Elective contribution - Answer-A contribution made to a 401k plan by an employer on an
employee's behalf pursuant to agreement for salary deferral.
Elective deferral - Answer-A deferral of compensation made by employee participant of
a CODA plan.
Employee stock ownership plan (ESOP) - Answer-A profit-sharing or stock bonus plan
in which funds must be invested primarily in employer's securities. An ESOP may
borrow in order to purchase company stock.
Employer contributions - Answer-Elective deferrals, nonelective contributions, and
discretionary profit-sharing contributions to a Q plan.
Excess benefit plan - Answer-A plan maintained by an employer solely to provide
benefits for certain employees in excess of limitations on contributions and benefits
imposed by Section 415.
Excess contributions - Answer-The excess of elective contributions made to a 401k plan
for HCEs for plan yr that are over max amount of such contributions permitted under
ADP test for the yr.
Exclusion allowance - Answer-One of the contribution limit tests applicable to 403(b)
plans. The actual exclusion allowance for a particular employee is determined through a
set of calculations that consider the individual's includable compensation, yrs of service,
and amounts previously excluded.
Fiduciary - Answer-An individual/org that has discretionary authority or control over a Q
plan trust, its assets, or its administration, or that - for comp - provides investment
advice regarding plan assets.
, Five-year cliff vesting - Answer-An approved vesting schedule in which participant is
fully vested in his benefits @completion of 5 yrs of service. Under schedule, participant
who is terminated or leaves company prior to 5 yrs of service has no right to any
benefits in plan.
Five-year rule - Answer-An IRS rule stating that all of a deceased's funds in Q plans,
IRAs, etc., must be distributed w/in 5 yrs of end of yr in which individual died. Exception
= when retirement vehicle names a designated beneficiary.
Flat amount formula - Answer-An approach to determining the retirement benefit in a
DB plan that promises each participant an annual flat $ amount for each yr of service
Flat percentage formula - Answer-An approach to determining retirement benefits in a
DB plan that uses a flat % of compensation at retirement
Forfeitures - Answer-Unvested benefits left in a retirement plan by departing plan
participants.
Forward averaging - Answer-A method of calculating taxes on a lump-sum distribution
that may result in a lower rate that would otherwise apply.
Frozen plan - Answer-A Q retirement plan that continues to exist but whose employer
contributions have been discontinued. Benefits for plan participants no longer accrue,
and distributions have been suspended.
Full retirement age (FRA) - Answer-The age at which full SS old-age benefits are
available.
Fundamental analysis - Answer-Focuses on economic, industry, and financial statement
data and earnings projections to determine the intrinsic value of a stock
Accrued benefit - Answer-A benefit that has accumulated up to a particular point in the
participant's employment
Accrued benefit method - Answer-A method of calculating and funding DB plan liabilities
accruing in a particular yr. Look at plan's benefit accrual for yr for each participant at
normal retirement and funds PV of benefit for that yr.
ACP test - Answer-A discrimination test that involves a % comparison of matching
contributions and nonelective employer contributions made on behalf of NHCEs
w/matching contributions and nondeductible employee contributions made on behalf of
HCEs.
Adoption agreement - Answer-That portion of the master or prototype plan document
that contains all of the alternatives and options that may be selected by an adopting
employer
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