Chapter 10-Retirement Plans
An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?
$6,000
Premature IRA distributions are asssessed a penalty tax of:
10%
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
Annuity
Traditional individual retirement annuity (IRA) dsitributions must start by
April 1 of the year following the participant attains age 70 1/2 -Or and excise tax will be assessed
What type of employee welfare plans are not subject to ERISA regulations?
Church plans
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 federal income tax withholding A participant must be complete rollover to another qualified plan within 60 days or the distribution is considered a nonqualified distribution and is subject to taxes/penalties. A plan sponsor must withold 20% of the distribution for federal taxes on a rollover. Once the rollover takes place to the new custodian, the remainder of the dsitribution is released
How are Roth IRA distributions normally taxed?
Distributions are received tax-free
Which of these retirement plans can be started by an employee, even if another plan is in existence?
IRA(individual retirement account)
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?
If Tom's employement is terminated, 20% of the funds would be forfeited. 80% vested means that 20% could be forfeited
Which of the following is TRUE about a qualified retirement that's top heavy?
More than 60% of plan assets are in key employee accounts
In an individual retirement account (IRA), rollover contributions are
NOT limited by dollar amount
Which tax would an IRA participant be subject to on distributions received prior to age 59 1/2
Ordinary income tax and a 10% tax penalty for early withdrawal
Post-tax dollar contributions are found in
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?
The account can be rolled into the surviving spouse's IRA
What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan?
100
An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?
20% is withheld for income taxes
What is the excise tax rate the IRS imposes on individuals ages 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?
50%
What is the exice tax rate the IRS imposes on individuals aged 7-/12 or older who do not take the required min distributions from their qualified retirement plan?
50%
How long does an individual have to "rollover funds from an IRA or qualified plan?
60 days
How long does someone have to "rollover" fund from an IRA or qualified plan?
60 days
A qualified profit-sharing plan is designed to:
Allow employees to participant in the profits of the company
A qualified profit-sharing plan is designed to:
Allow employees to participate in the profits of the company
A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over?
Income taxes plus a 10% penalty tax on $30,000
A sole proprietor may use this plan ONLY if the employees of this business are included
Keogh Pension Plan
A sole proprietor may use this plan ONLY if the employees of this business are included
Keough Pension Plan
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid:
Mandatory invome tax witthholding on the transfer amount
In a qualified retirement plan, the yearly contributions to an employee's account:
are restricted to maximum levels set by the IRS
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid:
mandatory income tax withholding on the transfer amount
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid
mandatory income tax withholding on the transfer amount There is no federal tax withholding inolved in a transer or funds from one qualified plan to another. Rollovers, however involve a 20% withholding. One the rollover takes place to the new custodian, the remainder of the distribution is made.
When funds are shifted from one IRA to another IRA, what percentage of the tax is withheld?
none
When funds are shifted straight from an IRA to another IRA, what percentage of the tax is withheld?
none
A retirement plan that sets aside part of the company's net income for distribution to qualified employees is called a:
profit sharing plan
A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a
profit sharing plan
An employer that offers a qualified retirement plann to its employees is eligible to:
to make tax-deductible contributions to the plan
