AD Banker Comprehensive Practice Exam

What does ERISA require of qualified plans?

1. That every plan has the same vesting schedule

2. That employers establish pension plans for their employees

3. Employers must benefit equally with the employees and beneficiaries

4. Qualified plans must meet certain minimum standards

The correct answer is: Qualified plans must meet certain minimum standards

The correct response indicates that qualified plans must meet certain minimum standards set forth by ERISA (Employee Retirement Income Security Act). ERISA was enacted to protect the interests of employees who participate in employee benefit plans, particularly pension plans. One key aspect of ERISA is that it establishes minimum standards for participation, vesting, benefit accrual, and funding. This ensures that employees have access to their benefits in a fair manner and that the plans are properly managed and funded. By meeting these standards, qualified plans can maintain their tax-favored status and provide security to participants regarding their retirement savings. This option aligns with ERISA’s core purpose of enhancing the reliability and integrity of employee benefit plans, thus ensuring that employees' retirement benefits are safeguarded. The other choices do not accurately reflect the requirements laid out by ERISA or may misrepresent the nature of employer obligations under the act.