FHCE 4210 Unit 7 quiz

A disadvantage of Carol, a 45 year old widow with no children, in considering naming her estate as the beneficiary of her traditional IRA is that her estate cannot be treated as a designated beneficiary for purposes of determining the required minimum distributions after she dies.

T

An estate cannot be treated as a designated beneficiary of a traditional IRA.

T

All of the following form of qualified plans must generally provide for a QJSA form of benefit EXCEPT Question 18 options: a cash balance pension plan a money purchase pension plan An ESOP a target pension plan

c

Bernard recently passed away at age 64 before beginning distributions from his employer's money purchase plan. Bernard was a single individual throughout his life and named his estate as the beneficiary of his accrued plan benefit. Over what time period must this benefit be distributed, if at all? Question 16 options: By calendar year end of the 5th year after the date of Bernard's death According to the life expectancy of the oldest beneficiary of Bernard's estate It does not need to be distributed because it is taxable in full in Bernard's estate According to the life expectancy of the youngest beneficiary of Bernard's estate reduced by 1 year annually

A

John is married to Billie. They have been married for the past 30 years and have 2 minor children. John has recently received an offer from his employer for an early retirement package. One of qualified pension plan payout options is a single life annuity. Which of the following statements regarding John's distribution options is (are) CORRECT? John can elect a single life annuity without spousal approval. A single life annuity would provide the largest monthly amount of payout. To accept a single life annuity, John must inform Billie but does not have to obtain her consent. To accept a single life annuity, John must obtain a signed, written waiver from Billie. Question 21 options: 2 and 4. 4 only. 3 only. 1,2 and 3.

A

Maria has a traditional IRA valued at $500,000. She named her daughter, Faith, as beneficiary of the account. If Maria dies prematurely, which of the following statements are CORRECT? Faith inherits the IRA. Faith can transfer the inherited funds to an inherited IRA via a direct trustee-to-trustee transfer and name her own beneficiary. Because Faith is a nonspouse beneficiary, she is not allowed to rollover the IRA. Faith can rollover the IRA into her own Section 401(k) plan. 1 and 2. 3 and 4. 1, 2, 3 and 4. 1, 2 and 3.

A

Mike is age 69 and his spouse, Kathy is age 64. If Mike dies, what is the best option for his IRA if Kathy wants to delay distributions as long as possible? Question 23 options: Rollover his IRA to her IRA and take distributions based on her own required beginning date (age 70 1/2) Keep the assets in his IRA and take distributions when Mike would have reached 70 1/2.

A

Stan is age 70 and his wife, Kris, is age 64. If Stan dies, what is the best option for his IRA if Kris wants to delay distributions as long as possible? A. Roll over his IRA to her IRA and take distributions based on her own required beginning date (age 701⁄2). B. Keep the assets in his IRA and take distributions when Stan would have reached age 701⁄2

A

Continuing with the facts of Question #1, assume that Kris dies instead of Stan. What is Stan's best option for her IRA if he wants to delay distributions as long as possible? A. Roll over her IRA to his IRA and take distributions based on his own required beginning date (age 701⁄2). B. Keep the assets in her IRA and take distributions when Kris would have reached age 701⁄2.

B

Mike is age 69 and his spouse, Kathy is age 64. If Kathy dies before Mike, what is the best option for her IRA if Mike wants to delay distributions as long as possible? Question 24 options: Rollover her IRA to his IRA and take distributions based on his own required beginning date (age 70 1/2) Keep the assets in her IRA and take distributions when Kathy would have reached 70 1/2.

B

The qualified joint and survivor annuity (QJSA) form of payment is a requirement for a vested participant in which of the following types of retirement plans? A. An IRA B. A traditional defined benefit pension plan C. An ESOP D. An age-weighted profit sharing plan

B

Which of the following is correct regarding the options available to a nonspouse beneficiary following the death of a traditional IRA owner? The distribution cannot be rolled over and the entire account must be distributed within 5 years. The nonspouse beneficiary may roll over the distribution into an inherited IRA using a trustee to trustee direct transfer. The distribution cannot be rolled over and the entire account must be distributed immediately. The nonspouse beneficiary may roll over the distribution into an IRA the nonspouse has previously established and funded.

B

A qualified domestic relation order (QDRO) may be used when: the spouse of the plan participant dies. the plan sponsor of a qualified plan voluntarily terminates the plan. the qualified plan participant and spouse divorce. a qualified plan is terminated by the Pension Benefit Guaranty Corporation (PBGC).

C

All of the following forms of qualified plans must generally provide for a QJSA form of benefit EXCEPT A. a cash balance pension plan B. a money purchase pension plan C. an ESOP D. a target benefit pension plan

C

Matt died and has named only his adult daughter, Suzie, as the designated beneficiary of his qualified plan account balance. Matt had not begun making RMDs from this account because he died at age 62. When must Suzie begin taking distributions from Matt's account to stretch the balance over her life expectancy? By September 30 of the year following the year of Matt's death By December 31 of the year of Matt's death By December 31 of the year following the year of Matt's death Whenever the plan document specifies that she must begin taking distributions

C

Matt has died and named only his adult daughter, Suzie, as the designated beneficiary of his quali- fied plan account balance. Matt had not begun making RMDs from this account because he died at age 62. When must Suzie begin taking distributions from Matt's account to stretch the balance over her life expectancy? A. By September 30 of the year following the year of Matt's death B. By December 31 of the year of Matt's death C. By December 31 of the year following the year of Matt's death D. Whenever the plan document specifies that she must begin taking distributions

C

Sam recently died at age 63, leaving an IRA with a FMV of $200,000 to his wife, Susan (age 55), who was the only designated beneficiary. Susan has no IRA of her own. Which of the following statements regarding Sam's IRA is CORRECT? Susan must receive the entire account balance within 5 years of Sam's death. Susan must begin taking distributions over Sam's remaining single-life expectancy. Susan can receive distributions over her remaining single-life expectancy, recalculated each year. Susan can receive a distribution from the IRA now but will be subject to a 10% early withdrawal penalty.

C

Steve has dies and named only his adult daughter, Sarah, as the designated beneficiary of his qualified plan account balance. Steve had not yet started making RMDs from this account since he died at 64. When must Sarah begin taking distributions from Steve's account to stretch the balance over her life expectancy? Question 25 options: By December 31 of the year Steve died When the plan document states that she must take distributions By December 31 of the year following Steve's death By Sept 30 of the year following Steve's death

C

Under a divorce decree, the assignment of the right to receive benefits from a qualified retirement plan by a court to the former spouse of a participant is referred to as: Question 1 options: the assignment of income doctrine. a collateral assignment. a qualified domestic relations order (QDRO). qualified domestic trust (QDOT).

C

Valerie, an unmarried individual, recently died at age 74, leaving behind an IRA with a FMV of $200,000. She began taking RMDs after attaining age 70 1/2 and correctly reported the same on her income tax returns. Before her death, Valerie named her granddaughter, Dawn, as the designated beneficiary of her IRA. Now that Valerie has died, Dawn has come to you for advice with respect to how these IRA benefits should be distributed. What do you tell her? Question 17 options: Dawn can toll the IRA over into an inherited IRA and take distributions beginning at age 70 1/2 In the year following Valerie's death, Dawn must begin taking distributions from the IRA over Valerie's remaining single life expectancy. In the year following Valerie's death, Dawn must begin taking distributions from the IRA over Valerie's remaining single life expectancy, reduced by 1 each subsequent year. As a nonspouse beneficiary, Dawn must take a lump-sum distribution by the end of the year.

C

A participant may receive an in-service distribution: Question 13 options: in an amount greater than his vested account balance. from a defined benefit pension plan at any time. from a defined contribution pension plan at any age, if the funds have been in the account for at least two years. from a profit-sharing plan.

D

All of the following statements regarding qualified domestic relations orders (QDROs) are correct EXCEPT: a QDRO is most commonly used in a divorce. distributions made to an alternate payee under a QDRO are subject to income tax. a QDRO may specify the time at which the alternate payee will receive the plan benefit. distributions made to an alternate payee under a QDRO subjects the payor to the 10% premature distribution penalty.

D

Ann, age 50, is the beneficiary of her father's traditional IRA, which was funded entirely by tax-deductible contributions. Her father recently died at age 76. Which of the following statements is CORRECT regarding Ann's options for the inherited account? Question 14 options: If Ann elects a lump-sum distribution from her father's IRA, the distribution will be taxed as ordinary income plus a 10% penalty. Ann may execute a direct transfer of the account into a traditional IRA she established 10 years ago and has been funding each year. Ann may execute a direct transfer of the account balance into an inherited IRA and defer required minimum distributions until she attains age 70½. Ann may execute a direct transfer of the account balance into an inherited IRA and must begin required minimum distributions by December 31 of the year following the year of her father's death.

D

At the time of his death at age 50 in 2018, Chad owned two Roth IRAs (J and T) that he had established four years ago. Roth IRA J has a balance of $14,000, consisting of $12,000 in regular contributions and $2,000 in earnings. Chad's spouse, Jen, is the beneficiary of Roth IRA J. Jen's marginal income tax bracket is 25%. Roth IRA T has a balance of $16,000, consisting of a conversion contribution of $14,000 in 2014 and $2,000 in earnings. Chad's son, Tim, is the beneficiary of Roth IRA T. Tim's marginal income tax bracket is 15%. Which of the following statements is/are correct regarding Chad's Roth IRAs? 1. Jen and Tim must begin distributions no later than December 31, 2019. 2. If Tim liquidates Roth IRA T in 2018, he will pay total income tax of $300. 3. The latest Jen could defer required minimum distributions is until Chad would have attained age 70 ½. 4. Jen and Tim may each make a direct trustee-to-trustee rollover of their respective amounts into their own Roth IRAs. A. Each of these statements is correct. B. None of these statements is correct. C. 1, 2 and 4 D. 2 only

D

Following the death of the owner of a traditional IRA, if no designated beneficiary is determined by the required date how must the IRA balance be distributed? Question 10 options: The balance must be distributed by December 31 of the year following the year of the owner-participant's death The balance must be distributed by December 31 of the year of the owner-participant's death The balance must be distributed by September 30 of the year following the year of the owner-participant's death Over the longer of 5 years or the remaining life expectancy of the owner-participant, reduced by one for each subsequent year

D

In order to avoid a government mandate regarding the qualified plan distribution period for non-spousal beneficiaries, a qualified plan participant's designated beneficiary must be determined by: Question 2 options: December 31 of the year following the year of the participant/owner's death. December 31 of the year of the participant's death. April 15 of the year the participant enters the plan. September 30 of the year following the year of the participant/owner's death.

D

A nonspouse beneficiary following the death of a traditional IRA owner may roll over the distribution into an IRA the nonspouse has previously established and funded. T/F

F

Beverly's husband, age 67, dies with a $1.2 million balance in his traditional IRA. Beverly, who is the designated beneficiary, would like to know what her options are regarding her deceased husband's IRA. She is currently 55 years old and has a life expectancy of 30 years. When she was younger, Beverly ran a consulting business, which allowed her to contribute a significant amount of money to a self-employed Keogh plan. When she closed her business, she rolled over the plan balance into her own traditional IRA. Beverly's only option is to withdraw the funds from her husband's IRA using the five-year rule.

F

For retirees of a defined benefit plan, a single life annuity provides a smaller monthly benefit for the plan participant than either a joint & survivor or a life & period certain annuity option. True False

F

Maria has a traditional IRA valued at $500,000. She named her daughter, Faith, as beneficiary of the account. If Maria dies prematurely, Faith can rollover the IRA into her own Section 401(k) plan.

F

Post-death distributions of a traditional IRA interest to a qualifying charity as beneficiary will be subject to ordinary income tax as income in respect of a decedent. T/F

F

Beverly's husband, age 67, dies with a $1.2 million balance in his traditional IRA. Beverly is the designated beneficiary . She is currently 55 years old and has a life expectancy of 30 years. When she was younger, Beverly ran a consulting business, which allowed her to contribute a significant amount of money to a self-employed Keogh plan. When she closed her business, she rolled over the plan balance into her own traditional IRA. She is able to roll her deceased husband's traditional IRA over to her own traditional IRA

T

Distributions made to an alternate payee under a QDRO are subject to income tax.

T

Distributions made to an alternate payee under a QDRO do not subject the payor to the 10% penalty tax on premature distributions.

T

If the participant's death occurs after retirement, a qualified plan must protect the plan participant's spouse by requiring that the normal form of distribution from the retirement plan for a married participant must be a joint and survivor annuity (with the exception of certain profit-sharing plans). T/F

T

If the participant's death occurs before retirement, a qualified plan must provide a spousal benefit called a qualified preretirement survivor annuity (QPSA) (with the exception of certain profit-sharing plans). T/F

T

In regards to required minimum distributions (RMDs) from a Roth IRA following the death of the account owner, the same required minimum distribution rules apply to the Roth IRA as apply to a traditional IRA when death occurs prior to the required beginning date.

T

Upon receiving a court ordered QDRO, plan trustees must freeze the account of the plan participant. True False

T

When there is more than one designated beneficiary, the beneficiary with the shortest life expectancy is used as the measuring life for purposes of determining the distribution period.

T