Which of the Following Is True Concerning Employer Funding of Nonqualified

question 79

Multiple Choice

Which of the following is True concerning employer funding of nonqualified deferred compensation plans?

• A) Employers are required to invest salary deferred by employees in investments specified by the employees.
• B) Employers are required to annually fund their deferred compensation obligations to employees.
• C) Employers annually deduct the amount earned by employees under the plan.
• D) Employers may discriminate in terms of who they allow to participate in the plan.

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Definitions:

Simple Interest

Simple interest is interest calculated only on the principal amount, or on that portion of the principal amount which remains unpaid.

Present Value

The present value of a sum of money or series of cash flows expected in the future, discounted at a certain rate of return.

Amortized Loan

A loan repaid in equal periodic amounts (or “killed off” over time).

Repayment Of Principal

The process of paying back the original amount borrowed in a loan, excluding any interest charges.