Massachusetts Life Producer Practice Exam

Which of the following scenarios does NOT violate the rules of a qualified retirement plan?

1. A single employee taking a loan

2. A spouse waiving survivor benefits

3. A corporation repossessing plan funds

4. An employee receiving retirement benefits

The correct answer is: An employee receiving retirement benefits

The scenario where an employee receives retirement benefits does not violate the rules of a qualified retirement plan because it is a fundamental feature of such plans. Qualified retirement plans are designed to provide employees with financial security during retirement, and as a result, allowing employees to access their benefits upon retirement is an essential aspect of these plans. Qualified retirement plans are governed by IRS rules, which lay out the provisions for when and how benefits can be distributed to employees. Receiving retirement benefits is a legitimate outcome of participation in these plans, as they exist specifically to accumulate funds for an employee's retirement years. This scenario aligns perfectly with the intended purpose of qualified retirement plans, ensuring compliance with regulatory requirements while also serving the financial needs of employees as they transition out of the workforce. In contrast, the other scenarios involve actions or situations that could lead to noncompliance with the rules governing qualified plans. For instance, taking a loan as a single employee may be permissible under certain conditions, but specifics about the plan's rules and treatment of loans must be carefully assessed to ensure compliance. A spouse waiving survivor benefits could undermine the plan's intent to provide survivors with financial security, raising ethical and regulatory concerns. Lastly, a corporation repossessing plan funds would violate the principle of protecting