CH9: Discretionary Benefits

The XYZ Company provides a program for its employees who need help dealing with the effects of domestic violence. The XYZ Company can offer this kind of service through which of the following programs?
a) family assistance program
b) employee assistance program
c) wellness program
d) employer assistance program

b) employee assistance program

Which of the following is rationale to apply a probationary period prior to permitting participation in an employee benefits plan?
a) Companies attempt to discourage long-term employment.
b) Companies view such periods as an opportunity to ensure that they have made sound hiring decisions.
c) Companies attempt to reduce employee entitlement.
d) Companies enable new employees to decide whether they wish to remain employed on a long-term basis before completing extensive paperwork.

b) Companies view such periods as an opportunity to ensure that they have made sound hiring decisions.

A 401(k) plan is which of the following types of retirement benefits?
a) defined benefit
b) nonqualified benefit
c) defined contribution
d) qualified benefit

c) defined contribution

Mary works at a pharmaceutical company as a customer service representative. Her employer allows her to choose the set of benefits she will receive on top of preestablished sets of benefits, such as medical insurance and term life insurance. The company gave her credits equal to 6% of her salary with which she decided to purchase dental and vision insurance. This pharmaceutical company uses what kind of benefits plan?
a) employee-financed
b) core plus option
c) flexible benefits
d) cafeteria

b) core plus option

Under which type of plan may employees exercise the option of trading extra benefits credits for cash?

core plus option plans

Which of the following could undermine competitive advantage?

offering employee benefits as an entitlement

Which of the following is the most common type of life insurance policy offered by companies?

term life

Which of the following is a commonly used employer-sponsored retirement plan design?

defined contribution

Effective employee benefits communications programs can help reduce which of the following?

an entitlement mentality

Which of the following laws permit employers to automatically enroll employees in a defined contribution plan?

Pension Protection Act

Outplacement assistance programs are best suited for which condition?

mergers and acquisitions

Which of the following contributed to the use of flexible benefits plans?

greater workforce diversity

You broke your neck at work. The company called to inform you that they had to switch your benefits from the short-term disability account to the long-term disability account. Based on this decision, how long have you been off work?
a) at least 1 to 2 months
b) 18 months
c) at least 3 to 6 months
d) 12 months

c) at least 3 to 6 months

The XYZ Company tries to influence employee food choices by stocking vending machines with l healthy food. They also offer programs to teach stress reduction techniques. Which kind of discretionary benefit program does this company sponsor?
a) employee assistance program
b) employer assistance program
c) wellness program
d) family assistance program

c) wellness program

Which of the following do qualified plans provide?
a) matching contributions to defined benefit plans
b) substantial tax breaks to employers and employees
c) substantial tax breaks to employees
d) matching contributions to defined contribution plans

b) substantial tax breaks to employers and employees

Under which type of plan may employees exercise the option of trading extra benefits credits for cash?
a) cafeteria benefits plans
b) flexible spending accounts
c) defined contribution plans
d) core plus option plans

d) core plus option plans

Since the costs of benefits has risen so dramatically in recent years, the majority of the companies decided to finance discretionary benefits using which of the following methods?
a) contributory financing
b) employee-financed benefits
c) noncontributory financing
d) employer-financed benefits

a) contributory financing

Which type of plan appeared as one of the first discretionary benefits practices?
a) wellness plans
b) employee discounts
c) educational assistance
d) retirement plans

d) retirement plans

Which of the following is NOT a provision of the Employee Retirement Income Security Act?
a) reporting and disclosure duties
b) vesting rights
c) employer matching contributions
d) fiduciary responsibilities

c) employer matching contributions

What type of pension plan commonly includes profit-sharing plans, stock bonus plans, and employee stock ownership plans?
a) deferred benefit
b) defined benefit
c) defined contribution
d) deferred contribution

c) defined contribution

Which of the following laws permit employers to automatically enroll employees in a defined contribution plan?
a) Internal Revenue Code
b) Employee Retirement Income Security Act
c) Pension Protection Act
d) Consolidated Omnibus Reconciliation Act

c) Pension Protection Act

Unscheduled absenteeism has climbed to its highest levels in the XYZ Company last month. In order to reduce costs, HR professionals in the XYZ Company changed their paid time off policy. This company used to grant each employee 10 vacation days, 5 paid days for sick leave, and 4 days for personal leave. With the new policy, this company combines vacation, sick leave, and personal leave policies into one paid time off policy (i.e., 19 days). The management kept funeral leave as a stand-alone policy. What is the XYZ Company's new policy called?
a) volunteer leave
b) sabbatical leave
c) integrated paid time off
d) combined paid time off

c) integrated paid time off

These represent a series of payments for the life of the participant and beneficiary.
a) collateral payments
b) periodic payments
c) annuities
d) lump sum distributions

c) annuities

Which of the following contributed to the use of flexible benefits plans?
a) greater workforce diversity
b) unions
c) cost savings initiatives
d) global competition

a) greater workforce diversity

Which set of rules prohibit employers from discriminating in favor of highly compensated employees in contributions or benefits, availability of benefits, rights, or plan features?
a) participation rules
b) vesting rules
c) nondiscrimination rules
d) Equal Pay Act

c) nondiscrimination rules

Which of the following is associated with Roth 401(k) plans?
a) Employees pay taxes on their contribution.
b) Employees can deduct their contributions from post taxable income.
c) Employees do not pay taxes on their contributions.
d) Investment gains are taxed.

a) Employees pay taxes on their contribution.

A Roth 401(k): income taxes are paid on the contributions to the Roth 401(k) when they are made. The funds grow tax free (no capital gains or interest income taxes). When the account owner retires money can be withdrawn from the account tax-free.

Which of the following is a commonly used employer-sponsored retirement plan design?
a) defined contribution
b) qualified contribution
c) IRA
d) Roth IRA

a) defined contribution

Which of the following benefits was previously offered on a discretionary basis, but, is now mandatory?
a) health insurance
b) employee assistance programs
c) retirement plans
d) paid time off

a) health insurance

Which government action contributed to the use of welfare benefits?
a) wage freezes
b) recovery from economic depression
c) the passage of the National Labor Relations Act
d) the passage of the Social Security Act

a) wage freezes

Which of the following is the most common type of life insurance policy offered by companies?
a) group life
b) universal
c) term life
d) whole life

c) term life