1.Jane provides a money purchase pension plan for her employees. She wants to fund the plan for each employee with either a term or whole life insurance policy. Which person does not pass the requirement for maintaining insurance as incidental to the plan?
Group of answer choices
Jeff has received $100,000 in his money purchase pension plan. He has a $1,000,000 death benefit policy that cost $20,000 that Jane provided.
Mary has received $200,000 in contributions to her plan. She also has a $500,000 whole life policy that cost $40,000.
Janice has received $45,000 in contributions of which $25,000 has been payed to whole life premium payments.
James has received $150,000 in contributions. $70,000 in premium payments were made to his whole life insurance policy.
2.Which circumstance is true regarding the purchase of life insurance within a qualified retirement plan?
Group of answer choices
The qualified plan must pass both the 25% test and the 100‐to‐1 ratio test.
Life insurance premiums paid by the employer will be taxable to the employee at retirement.
Life insurance may be purchased as long as it is not the primary focus of the plan.
A qualified plan cannot purchase life insurance.
3.A client receives ISOs with an exercise price of $24 when the stock is trading at $24. The client decides that she’d like to exercise these options two years after the date of the grant. At that time, the stock price has risen to $35/share. What should you advise the client regarding the transaction?
Group of answer choices
The client will have W‐2 income of $11/share upon exercise.
The client will have $24 of AMT income upon exercise.
The client’s adjusted basis will be $35/share at exercise
Upon exercise, the client will have no regular income for tax purposes.
4.Josh received 5,000 shares of Non-Qualified Stock Options that had an exercise price of $25/share when the stock was trading for $25 on the market. Two years from the date of grant, Josh exercised his shares with a stock price of $75/share. Josh:
Group of answer choices
has W‐2 income of $125,000.
has W‐2 income of $250,000.
has an AMT adjustment of $125,000.
has an AMT adjustment of $250,000.