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Regulatory Compliance & Legal Framework Flashcards

7 cards from real RMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. ERISA's anti-cutback rule under Section 204(g) prohibits a plan from eliminating which of the following?

    Answer: An optional form of benefit already accrued

    Section 204(g) prevents plans from retroactively eliminating or reducing optional forms of benefit that participants have already accrued.

  2. A disqualified person engages in a prohibited transaction under IRC Section 4975. What is the initial excise tax rate?

    Answer: 15%

    The initial excise tax on prohibited transactions is 15% of the amount involved per year the transaction remains uncorrected.

  3. Under the Worker, Retiree, and Employer Recovery Act (WRERA) of 2008, which RMD relief was temporarily granted?

    Answer: 2009 RMDs from defined contribution plans and IRAs were waived

    WRERA waived required minimum distributions for 2009 from IRAs and defined contribution plans to prevent forced selling during the financial crisis.

  4. Under SECURE 2.0, Roth contributions to employer plans are no longer subject to which requirement starting in 2024?

    Answer: Required minimum distributions during the owner's lifetime

    SECURE 2.0 eliminated lifetime RMDs for Roth accounts in employer plans, aligning them with the existing Roth IRA treatment.

  5. Which ERISA provision permits a plan to offer a loan to a participant without triggering a prohibited transaction, provided specific conditions are met?

    Answer: ERISA Section 408(b)(1)

    ERISA Section 408(b)(1) provides a statutory exemption allowing participant loans that meet requirements such as adequate security and reasonable interest rates.

  6. The PBGC insures benefits in which type of retirement plan?

    Answer: Defined benefit plans

    The Pension Benefit Guaranty Corporation insures defined benefit pension plans and pays guaranteed benefits if a covered plan terminates with insufficient assets.

  7. Which regulation governs the investment of plan assets and requires that they be held in trust or insurance contracts?

    Answer: ERISA Section 403

    ERISA Section 403 requires that plan assets be held in trust (or in insurance contracts or custodial accounts) to protect them from employer creditors.