3 test

All of the following statements about traditional individual retirement accounts are false EXCEPT 10% penalty is applied to withdrawals after age 59 1/2 Withdrawals are normally tax-free to the recipient 10% penalty is applied to withdrawals before age 59 1/2 Contributions are not tax deductible

10% penalty is applied to withdrawals before age 59 1/2

What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan? 30% 40% 50% 60%

50%

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age? • 70 1/2 • 65 55 • 59 1/2

59 1/2

Traditional individual retirement annuity (IRA) distributions must start by: age 59 1/2 age 65 April 1st of the year following the year the participant attains age 59 1/ • April 1st of the year following the year the participant attains age 70 1/2

April 1st of the year following the year the participant attains age 70 1/2

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee? Distribution is subject to capital gains tax Distribution is subject to ordinary income tax Distribution is subject to a tax penalty Distribution is subject to federal income tax withholding

Distribution is subject to federal income tax withholding

Post-tax dollar contributions are found in 401K investments Traditional IRA investments SIMPLE investments Roth IRA investments

Roth IRA investments

Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made? Surrender charge is applied The account can be rolled into the surviving spouse's IRA • Distributions will be received tax-free if surviving spouse is over age 59 1/2 Future distributions are payable to the owner's estate

The account can be rolled into the surviving spouse's IRA

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the: marital deduction death benefits Section 1035 exchange • capital gains tax rate

marital deduction