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Benefits Beginner: Introduction to 401(k) Plans

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1.
To roll over a 401(K) plan means to _______.
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Move it to a new custodian. Rolling over means moving from one custodian to another.
2.
If an employee contributes money into a 401(k) plan from her paycheck instead of receiving it as cash, that contribution is called _______.
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An elective contribution. Elective contributions are made by choice from one's earnings.
3.
The funds you contribute to your Roth 401(k) plan are tax-deductible.
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False. The hallmark of the Roth 401(k) is that employee contributions are not tax-deductible, but withdrawals in retirement are tax-free.
4.
Which of the following 401(k) distributions may incur a penalty if taken prior to age 59½?
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Paying for rent. Paying for rent is not one of the allowed hardship exceptions.
5.
A _______ moves funds from one 401(k) to another without you ever touching the funds.
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Direct rollover. This form of rollover takes place between your current account's custodian and the new one you have elected.
6.
In establishing eligibility requirements for a 401(k) plan, an employer is allowed to require that a certain number of hours be worked.
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True. An employer may set a minimum service requirement.
7.
In a SIMPLE 401(k) plan, the employer may make either matching or non-matching contributions.
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True. The employer is allowed to choose an option.