Chapter 9: Retirement Plans

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?

50%

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?

$2,500

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

how long does an individual have to rollover funds from an ira or qualified plan?

60 days

traditional individual retirement annuity (ira) distributions must start by

April 1st of the year following the year of the participant attains age 70.5

Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?

Income Tax and a 10% penalty tax for early withdrawl

A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 for income tax 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 qualified profit-sharing plan is designed to

allow employees to participate in the profits of the company

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

How are Roth IRA distributions normally taxed?

distributions (withdrawals) are received tax-free

At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in

income tax and 10% penalty assessed upon funds withdrawn from the Qualified Plan

A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a

profit-sharing

Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?

the employee