Section 24

On traditional 401k plans, Employer contributions may not exceed

25% of total payroll.

529 plans allow large contributions as high as

250,000 and above

Hardship withdrawals are only permitted in

401K plans, not IRA's

It is not permitted to have a 401 k and a

403 b at the same time.

tax exempt organizations are listed under internal revenue code

501 cee 3

Substantially equal periodic payment exception under the I.R.S. rule

72 tee

An individual covered under a traditional IRA would NOT be able to also maintain which of the following?

A 401K and 403B

Distributions from which of the following can be rolled over into an IRA?

Another IRA, Corporate pension plan, Corporate profit-sharing plan, and a Keogh plan

When it comes to qualified plans, you can postpone beginning distributions until

April 1st of the calendar year following retirement

Which of the following employer-sponsored plans is NOT covered by ERISA?

Deferred compensation

There are no tax benefits in an

an UTMA account

The economic growth and tax relief reconciliation act of 2001 is responsible for

catch up contributions

IRA's, 401 kays and 403 bees all allow for

catch up contributions over 50 years of age

The Coverdell may only be used by persons who fall within

certain income limits—while 529 plan have no such limits

Employer contributions to 401 kays and defined benefit plans are

deductible to the employer

Deferred compensation plans are not qualified plans and may be

discriminatory.

Funds that are not used for qualified education expenses may be withdrawn, but the earnings are subject to

income tax plus a 10% tax penalty.

457 plans are available to government entities and some tax-exempt organizations

they do not follow erisa rules, they can be discriminatory

Under the Internal Revenue Code, the income distributed from a non-contributory pension plan is taxed

to the retiree slash plan participant as ordinary income

The income and capital gains earned in the account are tax deferred until the funds are withdrawn in a

traditional IRA

The Coverdell ESA has a maximum annual limit is

$2,000 and offers tax-free growth, it is most suitable for lower income families

If funds remain unused in the Coverdell ESA, they must be distributed to the named beneficiary on the account by

30 days after the child's 30th birthday

Excess contributions to an IRA are subject to

6% penalty on the amount that exceeds if the excess is not removed by the time the taxpayer files a tax return, but no later than april 15th

settlor functions of an erisa plan include

Determining the age at which benefits are to be provided, Changing the level of employer contributions, and Amending the plan

ineligible investments for an IRA include

Gems, intangibles, and works of art

Life insurance may not be used to fund an

I.R.A.

Withdrawals during retirement from which of the following accounts would most likely be subject to the greatest amount of taxation?

Qualified variable annuity

The requirement for a retirement plan trustee to follow fiduciary standards is found in

Section 404 (c) of ERISA.

On a traditional IRA

The income and capital gains earned in the account are tax deferred until the funds are withdrawn.

Which of the following statements regarding a traditional IRA is TRUE?

The income and capital gains earned in the account are tax deferred until the funds are withdrawn.

Which of the following is NOT an example of a non-qualified retirement plan?

a SIMPLE plan

Voluntary employee contributions are optional in a

money purchase pension plan

Under ERISA, which of the following activities may a fiduciary employ for a corporate retirement plan?

mploy third-party pension consultants to advise the plan on the purchase of complex financial instruments.

Section 529 plans are also known as

municipal fund securities or q.t.p.

A common benefit for a business to provide a deferred compensation plan is to

retain key employees, because they can discriminate

In a defined benefit plan, the retiree receives a specified amount such as

retirement income equaling a percentage of the average of his last 5 years of compensation. This means that the sponsor is taking the risk.

Both traditional IRAs and Roth 401(k) plans have

R.M.D's at age 70½.

donor maintains control over the funds in

Section 529 plan

A person providing which of the following services to an ERISA plan would be performing in a fiduciary capacity?

Selecting and monitoring third-party service providers

Section 404(c) of ERISA deals with

fiduciary responsibilities

a keogh plan is similar to an

sep IRA

Keogh plans allow for contributions

substantially larger than traditional I.R.A. limits

The 457 plan allows participants to

withdraw funds at any time, not just after age 59½, without incurring the 10% tax penalty. Income taxes would, of course, be due, but no penalty.

The following plans must meet set standards for vesting, eligibility, and funding under ERISA.

Keogh, profit-sharing, and corporate pension plans

The Employment Retirement Income Security Act of 1974 (ERISA) is

a federal law regulating many aspects of private retirement plans

457 plans are deferred

compensation plans

IRAs and Keogh plans are similar in the following ways

deferral of taxes, there is a 50% tax penalty for insufficient distributions, and distributions without penalty can begin as early as age 59½

In a 401(k) plan, a plan sponsor can shift investment risk to the

employee by complying with ERISA Section 404(c) rules.

if an erisa plan offers a broad index fund, a medium-term government bond fund, and a cash-equivalent fund they are reducing

fiduciary exposure

The entire amount of the distribution from a qualified annuity

is subject to ordinary income tax

Keogh plans must have eligibility requirements that cover all employees who are

full- time, are at least 21 years of age, and have 1 or more years of service.

You may transfer unused funds in a coverdell E.S.A to Related parties under 30 years old, which would include

immediate family members of the original beneficiary, parents, cousins, aunts and uncles, and even in-laws.

One may have both a Roth IRA and a Roth 401(k) contributing

the maximum to each one.

A money purchase pension plan is a defined contribution plan established by

the employer, thereby making the employer contributions mandatory.

the latest date that an IRA participant may make an IRA deposit for the current year is April 15 of the following year or

the first business day following if the 15th is a Saturday or Sunday

The difference between a 457 for a government entity and a 457 for a tax exempt organization is that

a government plan must hold its assets in trust or custodial accounts for the participants

A basic difference between a Section 457 plan established on behalf of a governmental entity and one established by a private tax-exempt organization is that

a governmental plan must hold its assets in trust or custodial accounts for the benefit of individual participants

When the distribution is paid in equal annual amounts over the owner's life

a premature distribution from a traditional IRA will be exempt from the premature distribution penalty

basis for a deposit into an defined contribution Keogh HR-10 account is equal to

all earned income for the year

To comply with the safe harbor requirements of Section 404(c) of ERISA, the trustee of a 401(k) plan must

allow plan participants to exercise control over their investments and provide plan participants with information relating to the risks and performance of each investment alternative offered

if a plan administrator prepared a written investment policy statement meeting erisa requirements, you would expect to find all of the following

investment philosophy, performance measurement parameters, and methods to be used for determining how the plan will meet future cash flow needs

When a corporation establishes a qualified money purchase plan, the corporation is obligated to

make annual contributions at the rate stated in the plan

To comply with the safe harbor requirements of Section 404(c) of ERISA

minimum of 3 different investment alternatives and allow plan participants to change their investment options quarterly

Those individuals who are considered parties in interest due to handling the assets of a corporate retirement plans are

not permitted to use those funds to acquire company assets in an amount beyond the allowable limits

a beneficiary of an ESA who withdraws the funds for nonqualified expenses will be taxed on

only earnings since the contributions were made with after-tax dollars. as well as a 10% penalty

If an beneficiary of a BDA is in a high tax bracket his best option is to

open a separate inherited IRA in martha's name for the benefit of the beneficiary

IRA contribution limits are the total for all accounts including

roth and traditional. For example, a person over 50 can contribute up to 7 thousand total, over all accounts.

403 Bees are for tex exempt organizations and are referred to as

tax sheltered annuities because only annuities were allowed up until 1974. Now mutual funds are also allowed.

An investment policy statement prepared for clients describes

the allocation percentages for each asset class and the expected returns from each class, and outlines strategies that may be used for timing the market and choosing specific investments within each class