Enhance your TOEIC Reading skills with this comprehensive practice test focusing on employee retirement plan details. This test will help you familiarize yourself with the format and content of the TOEIC Reading section, specifically Part 1 (Incomplete Sentences) and Part 2 (Text Completion). Let’s dive into the practice questions and improve your understanding of retirement plan terminology and concepts.
How to create an employee handbook is an essential skill for HR professionals, and understanding retirement plan details is a crucial part of that process. This practice test will help you develop the necessary language skills to comprehend and communicate about employee benefits effectively.
Part 1: Incomplete Sentences
In this section, you will find 30 incomplete sentences. For each question, select the best word or phrase (A, B, C, or D) to complete the sentence.
-
The company’s retirement plan is designed to provide financial __ for employees after they stop working.
A. security
B. insecurity
C. uncertainty
D. instability -
Employees must __ at least 5% of their salary to the 401(k) plan to receive the full company match.
A. withdraw
B. contribute
C. deduct
D. subtract -
The __ date for enrolling in the retirement plan is the first day of the following month after hire.
A. eligibility
B. requirement
C. qualification
D. entitlement -
Vesting refers to the __ of ownership an employee has in the employer’s contributions to their retirement account.
A. percentage
B. duration
C. frequency
D. intensity -
Employees can choose to invest their retirement savings in a variety of __ options, including stocks, bonds, and mutual funds.
A. investment
B. speculation
C. gambling
D. betting -
The catch-up contribution allows employees over 50 years old to __ additional money to their retirement accounts.
A. remove
B. borrow
C. save
D. spend -
A __ retirement plan allows employees to save money on a tax-deferred basis.
A. qualified
B. disqualified
C. unqualified
D. non-qualified -
Employees should carefully review the __ of their retirement plan to understand the rules and benefits.
A. summary plan description
B. brief plan overview
C. concise plan abstract
D. short plan synopsis -
The __ of a retirement plan determines how much an employee can contribute annually.
A. limitation
B. restriction
C. constraint
D. ceiling -
A __ withdrawal from a retirement account before age 59½ may result in penalties and taxes.
A. premature
B. tardy
C. delayed
D. postponed -
Employees can often __ their retirement savings from a previous employer’s plan into their new employer’s plan.
A. rollover
B. transfer
C. relocate
D. shift -
The __ of a retirement plan refers to the person or entity responsible for managing the plan’s assets.
A. fiduciary
B. beneficiary
C. contributor
D. participant -
Many companies offer a __ period during which employees can make changes to their retirement plan elections.
A. open enrollment
B. closed enrollment
C. restricted enrollment
D. limited enrollment -
A defined benefit plan guarantees a specific __ amount to employees upon retirement.
A. pension
B. salary
C. bonus
D. commission -
Employees should consider their __ tolerance when selecting investments for their retirement accounts.
A. risk
B. danger
C. hazard
D. peril -
The __ rule allows employees to withdraw money from their 401(k) while still employed if they experience financial hardship.
A. hardship
B. leniency
C. flexibility
D. accommodation -
A __ retirement plan allows employees to choose how much to contribute from their salary.
A. mandatory
B. compulsory
C. required
D. voluntary -
The __ of a retirement plan outlines the specific benefits and conditions for employees.
A. terms and conditions
B. rules and regulations
C. policies and procedures
D. guidelines and directives -
Employees should __ diversify their retirement portfolio to minimize risk.
A. adequately
B. insufficiently
C. poorly
D. scarcely -
A __ retirement plan requires employers to make contributions on behalf of eligible employees, regardless of whether the employees contribute.
A. non-contributory
B. contributory
C. participatory
D. voluntary -
The __ date is when an employee becomes eligible to receive full retirement benefits without penalty.
A. normal retirement
B. early retirement
C. delayed retirement
D. phased retirement -
Employees should regularly __ their retirement account to ensure it aligns with their financial goals.
A. review
B. ignore
C. neglect
D. overlook -
A __ is a document that summarizes the key features of a company’s retirement plan.
A. prospectus
B. brochure
C. pamphlet
D. flyer -
The __ limit for 401(k) contributions is adjusted annually by the IRS to account for inflation.
A. contribution
B. donation
C. allocation
D. appropriation -
Employees should consider their __ when deciding how much to contribute to their retirement plan.
A. time horizon
B. clock face
C. calendar year
D. fiscal period -
A __ retirement plan allows employees to make after-tax contributions and potentially enjoy tax-free withdrawals in retirement.
A. traditional
B. conventional
C. Roth
D. standard -
The __ of a retirement plan refers to the process of determining an employee’s share of the plan’s assets.
A. allocation
B. distribution
C. dispersion
D. dissemination -
Employees should be aware of any __ fees associated with their retirement plan, as these can impact overall returns.
A. administrative
B. managerial
C. executive
D. supervisory -
A __ retirement plan combines features of both defined benefit and defined contribution plans.
A. hybrid
B. mixed
C. blended
D. composite -
The __ rule allows certain employees to access their retirement funds penalty-free if they leave their job at age 55 or older.
A. Rule of 55
B. Rule of 65
C. Rule of 75
D. Rule of 85
Retirement Plan Options Comparison Chart
Part 2: Text Completion
In this section, you will read four texts about different aspects of employee retirement plans. Each text has four blanks. For each blank, choose the best word or phrase (A, B, C, or D) to complete the text.
Text 1: Understanding 401(k) Plans
A 401(k) plan is a popular type of (1)__ retirement plan offered by many employers. Employees can choose to have a portion of their salary (2)__ into the plan on a pre-tax basis. This means that the money is deducted from their paycheck before taxes are calculated, potentially lowering their current tax bill. The funds in the account can then be (3)__ in various investment options, such as stocks, bonds, and mutual funds. One of the key benefits of a 401(k) plan is that many employers offer a (4)__, where they contribute additional money to the employee’s account based on the employee’s contributions.
-
A. defined benefit
B. defined contribution
C. pension
D. annuity -
A. withdrawn
B. deposited
C. transferred
D. allocated -
A. invested
B. spent
C. saved
D. donated -
A. penalty
B. fee
C. match
D. bonus
Text 2: Vesting Schedules
Vesting is an important concept in employee retirement plans that determines how much of the employer’s contributions an employee owns. Many companies use a (5)__ vesting schedule, where the employee’s ownership of the employer’s contributions increases over time. For example, an employee might be 20% vested after one year of service, 40% after two years, and so on until they are fully (6)__ after five years. Some companies, however, use (7)__ vesting, where employees become 100% vested in employer contributions immediately. Understanding your company’s vesting schedule is crucial because if you leave your job before being fully vested, you may (8)__ some or all of the employer contributions.
-
A. graduated
B. immediate
C. delayed
D. accelerated -
A. invested
B. contributed
C. vested
D. enrolled -
A. partial
B. cliff
C. staggered
D. progressive -
A. forfeit
B. gain
C. increase
D. multiply
Text 3: Required Minimum Distributions
As employees approach retirement age, they need to be aware of Required Minimum Distributions (RMDs). These are (9)__ withdrawals that the IRS requires individuals to take from their retirement accounts, such as traditional IRAs and 401(k)s, once they reach a certain age. The age at which RMDs must begin has recently been (10)__ to 72. The amount of the RMD is calculated based on the account balance and the account holder’s life expectancy. Failing to take the required distribution can result in a significant (11)__. It’s important to note that Roth IRAs are not subject to RMDs during the owner’s lifetime, which makes them an attractive option for those who want to (12)__ their retirement savings for as long as possible.
-
A. voluntary
B. optional
C. mandatory
D. discretionary -
A. decreased
B. increased
C. maintained
D. eliminated -
A. reward
B. incentive
C. penalty
D. bonus -
A. spend
B. withdraw
C. preserve
D. reduce
Text 4: Retirement Plan Fees
When participating in a retirement plan, it’s crucial to understand the various fees associated with the account. These fees can have a significant (13)__ on the overall growth of your retirement savings. Common types of fees include investment fees, which are charged by the funds you invest in, and administrative fees, which cover the costs of (14)__ the plan. Some plans may also charge individual service fees for specific actions, such as taking a loan from your account. To minimize the impact of fees on your retirement savings, it’s important to (15)__ the fee structure of your plan and choose low-cost investment options when possible. Many employers are now required to provide fee disclosures to help employees make (16)__ decisions about their retirement accounts.
-
A. benefit
B. advantage
C. impact
D. profit -
A. eliminating
B. creating
C. destroying
D. maintaining -
A. ignore
B. review
C. avoid
D. increase -
A. informed
B. uninformed
C. careless
D. reckless
Retirement Plan Fee Comparison
Answer Key
Part 1: Incomplete Sentences
- A
- B
- A
- A
- A
- C
- A
- A
- D
- A
- A
- A
- A
- A
- A
- A
- D
- A
- A
- A
- A
- A
- A
- A
- A
- C
- B
- A
- A
- A
Part 2: Text Completion
Text 1:
- B
- B
- A
- C
Text 2:
5. A
6. C
7. B
8. A
Text 3:
9. C
10. B
11. C
12. C
Text 4:
13. C
14. D
15. B
16. A
By practicing with these TOEIC Reading questions focused on employee retirement plan details, you’ll improve your comprehension of complex financial terminology and concepts. Remember to review your answers and study the explanations for any questions you found challenging. Consistent practice with varied topics will help you excel in the TOEIC Reading section and enhance your overall English proficiency for professional contexts.
