Chapter 9 exam - Retirement Plans (10 cau)
Post-tax dollar contributions are found in A: 401K investment B:Traditional IRA investment C: Simple Investment D: Roth IRA investments
D: Roth IRA investments Non income tax deductions can be taken or contributions made to a Roth, but the earnings on those contributions are entirely tax-free when they are withdrawn
How long does an individual have to "rollover" funds from IRA or qualified plan? A: 60 days B: 90 days C: 120 days D: No limit
A: 60 days In IRA and qualified plans, the time limit for rollover funds is 60 days, or the funds could be subjected to income and penalty tax
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 Church plans are exempt from ERISA regulations
Which of these retirement plans can be started by an employee, even if another plan is in existence A: Individual Retirement Account (IRA) B: Defined plan C:Keogh Plan D: 403(b) Plan
A: Individual Retirement Account (IRA) An IRA may established by an employee, regardless of any other retirement plan
Permature IRA distributions are assessed a penalty tax of A: 0% B: 10% C: 15% D:20%
B: 10% Premature distributions from an IRA are subject to a 10% penalty tax
A qualified profit-sharing is designed to: A: Allow key employees to participate in the profits of the company B: allow employees to participate in the profit of the company C: Keep key employees from leaving the company D: Allow employees to elect company officers
B: allow employees to participate in the profit of the company One of the purposes of a qualified profit-sharing plan is to distribute a portion of company earnings to employees
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? A: No deduction allowed B:$2,500 C: $2,000 D: $1,000
B:$2,500 In this situation, the maximum allowable IRA contribution is $2,500
Traditional Individual retirement annuity (IRA) distributions must start by: A: age 59 1/2 B: age 65 C: April 1st of the year following the year participant attains age 59 1/2 D: April 1st of the year following the year the participant attains age 70 1/2
C: April 1st of the year following the year participant attains age 59 1/2 Distributions from a traditional IRA must be made by April 1 following the year the participant turn 70 1/2 or an excise tax will be assessed
An IRA owner can start making withdrawals and NOT be subjected to tax penalty beginning at what age? A: 70 1/2 B: 65 C: 55 D: 59 1/2
D: 59 1/2 Traditional Individual Retirement Account (IRA) withdrawals are normally subject to a tax penalty if they are made before the owner each age 59 1/2
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 Qualified distributions are received tax free in a Roth IRA