Chapter Questions
Identify and briefly describe the employee benefits discussed in the chapter for which the tax code provides favorable tax treatment.
Explain the advantages granted to employees under the tax laws governing the following:a. Health insurance plans for which the employer pays the premium.b. Contributions made by an employer for life insurance on the lives of employees.
dentify and briefly explain the requirements for a pension plan to be "qualified" under ERISA. What are the advantages of qualification?
Identify and explain the differences in the funding agencies an employer may use for funding a qualified pension plan.
What is the basic difference between allocated funding instruments and unallocated funding instruments?Identify the funding instruments that fall into each category:
The PBGC guarantees insured plan participants against a loss of benefits that can result from funding deficiencies. How can funding deficiencies arise?
In what way does the employer assume a greater element of risk under an immediate participation guarantee pension plan than under a group deferred annuity?
Briefly describe the special requirements that apply to a top-heavy plan. Why were these requirements enacted?
Briefly outline the provisions of the tax code relating to deductibility of premiums and taxation of policy proceeds in key-person life insurance.
In what way(s) does the PBGC protect (a) employees and (b) employers?