Chapter 10 Retirement Plans

How long does an individual have to rollover funds from an IRA or qualified plan? a. 60 days b. 90 day c. 120 days d. no limit

a. 60%

What type of employee welfare plans are not subject to ERISA regulations? a. Church plans b. major medical plans c. corporate d. qualified plans

a. church plans

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid: a. mandatory income tax withholding on the transfer amount b. paying transfer fees c. paying trustee fees d. ever paying income taxes on the distributions

a. mandatory income tax withholding on the transfer amount

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 a. marital deduction b. death benefits c. Section 1035 exchange d. capital gains tax rate

a. marital deduction

Premature IRA distributions are assessed a penalty tax of a. 0% b. 10% c. 15% d. 20%

b. 10%

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction? a. 10% is withheld for income taxes b. 20% is withheld for income taxes c. 30% is withheld for income taxes d. nothing is withheld

b. 20

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? a. surrender charge is applied b. the account can be rolled into the surviving spouse's IRA c.Distributions will be received tax-free if surviving spouse is over age 59 1/2 d. Future distributions are payable to the owner's estate

b. account can be rolled into the surving spouse's IRA

What does a 401(k) plan generally provide its participants? a. tax-free distributions b. salary-deferral contributions c. salary deferral distributions d. a defined retirement benefit

b. salary deferral contributions

Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? a. 20% of the funds are subject ot taxes b. 8-% of the funds are invested in a separate account c. If Tom's employment is terminated, 20% of the funds would be forfeited

c

In a qualified retirement plan, the yearly contributions to an employees account: a. are not tax deductible b. are restricted to minimum levels set by the IRS c. are restricted to maximum levels set by the IRS d. must be matched dollar-for-dollar by the employer

c.

What is the max number of employees that an employer can have in order to start a SIMPLE retirement plan? a. 25 b. 50 c. 100 d. 250

c. 100

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? a. distribution is subject to capital gains tax b. distribution is subject to ordinary income tax c. distribution is subject to tax penalty d. distribution is subject to federal income tax withholding

d

Post-Tax Dollar contributions are found in: a. 401 k investments b. traditional IRA investments c. SIMPLE investments d. Roth IRA invements

d. Roth IRA investments

How are Roth IRA distributions normally taxed? a. 10% penalty tax is applied b. taxed as ordinary income c. capital gains tax is applied d. distributions are received tax-free

d. distributions are received tax-free

When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld? a. 10% b. 20% c. 30% d. none

d. none

In an individual retirement account (IRA), rollover contributions are a. subject to capital gains tax b. subject to ordinary income tax c. partially limited by dollar amount d. not limited by dollar amount

d. not limited by dollar amount