11 Retirement Plans

Educational IRA 529 ESA--- -max -what if kid takes out excess then he needs for more than qualified education expenses -until they are what age -what if it is not exhausted by age 30 -what school -contributions deductible? -what are contributions considered? -Tax defferd? -Withdrawal

-2,000 per kid per year -taxable to the niece, the beneficiary of the plan -18 -30, if value is not used up pay 10% penalty or roll it over into another ESA -K through college -non deductible contributions -Considered gifts -Yes tax deffered -tax free withdrawal at federal level(and most states if you stay instate)

TAX-SHELTERED ANNUITIES (403(b) PLANS) -deposit taxed? -withdrawals? -who is elegbile

-deposits are tax free -withdrawals fully taxed ordinary income - being a school system employee or hospital "pay those ordianry taxes on your way out stupid TEACHERS" NOT students

529 - College Saving

-more popular option -save money for college tuition

Withdrawals from IRA or Keogh penalty exception

-ordinary income plus 10% *death or disability exception

Health Savings Accounts (HSAs)

-qualified employer sponsored plans -IRS allows a one-time funding distribution from an IRA to a qualified HSA without paying federal taxes or penalties on the IRA distribution.

Criteria for participation in qualified retirement plan: 1.Age 2.hours worked 3.How many years at the company minimum

1. 21 an older (like a bar) 2. 1,000 + hours a year 3. 1 year

Non qualified retirement plan Defferred Compensation

Deferred compensation = promise made by an employer to defer a certain amount of an employee's salary upon retirement IRS approval not needed Doesn't have to be offered to every employee Payroll deductions -Employee contributions grow tax deferred

IRA vs Keogh -source of contribution -permissible investments -Non permissible -Change in employer -Penalty for excess -Taxes on distributions

"REAL boi Mi coins are always good" "Term insurance and Trading baseball cards NEVER" "Keogh likes CASH VALUE plan IRA hates CASH VALUE plan"

529 - Prepaid Tution

-Prepaid plans allow resident donors to lock in current tuition rates by paying now for future education costs.

SEP IRA

-easiest and simplest to set up for self employed

529 Facts 1. who can open up plan?

1.Anyone can for a minor, do not have to be family member

Which of the following types of retirement plans would be most beneficial to a young employee of a corporation? A)Defined contribution pension plan. B)Profit-sharing plan. C)Keogh plan. D)Defined benefit pension plan. and what about for older guys near retirement

A) Defined contribution pension plan. the benefit plan is more better for the older guys

Which of the following individuals would NOT be permitted to open an IRA? A. An individual whose sole income consists of dividends and capital gains B. A divorced mother whose sole income is alimony and child support C. A self-employed attorney who has a Keogh plan D. A corporate officer covered by a 401(k) plan

A. An individual whose sole income consists of dividends and capital gains

Which of the following can be rolled over into an IRA? Another IRA Balances from savings accounts Corporate profit-sharing plan Judgments from law suit settlements

Another IRA Corporate profit-sharing plan *Assets from any qualified corporate plan or from another IRA may be rolled over into an IRA. "im an IRA slut and ill take on all qualified plan's dicks" get it done in 60 dyas becasue i cant do this more than once a year.

A self-employed individual has 2 full-time employees and makes the maximum allowable contribution to his own Keogh (HR-10 plan). What percentage of each employee's earned income must he contribute to their plans as eligible employees? A)15% B)25% C)There is no requirement to contribute to the employees' plans D)10%

B 25 When a self-employed individual makes the maximum contribution to his own Keogh (HR-10 plan), he must contribute 25% of any eligible employees' earned income to their plans.

The amount paid into a defined contribution plan is set by the A. ERISA-defined contribution requirements B. trust agreement C. employer's age D. employer's profits

B. trust agreement shows the formulas and whats up

Which of the following is not eligible to open a Keogh but is eligible to open an IRA? A. College professor who makes $10,000 on the sale of a book and several articles B. Corporate officer who earns $40,000 plus an additional $10,000 as a part-time speaker C. Doctor who receives $10,000 from a restaurant he owns D. Corporate officer who receives a $5,000 bonus

D. Anyone with earned income can open an IRA; the tax deductibility of a person's contributions depends on eligibility to participate in an employer-sponsored qualified retirement plan and on the person's income. Each of the listed individuals had income earned from selfemployment, and therefore could open a Keogh plan, except for the corporate officer receiving a bonus. "you need be a working man so almighty Mr KEOGH will let you in on his secret. hes doing it on his own and paying us 25%"

A grandchild inherits his grandfather's IRA from which mandatory distributions had already begun.

The grandchild must begin taking minimum required distributions based on his own life expectancy.

One of your customers set up a Section 529 plan for a child of one of his neighbors and contributed to it for some years. When the child reached age 17, it was obvious that he had no plans to pursue education beyond high school and your customer decided to redesignate the account. Which of the following would be a permissible new beneficiary?

The original beneficiary's younger sister if the beneficiary is redesignated, the new beneficiary must be a close family member of the first.

One of your customers has maintained a traditional IRA for the past 15 years. Some of his annual contributions were not tax deductible due to his income level and participation in another qualified plan. At age 60, the customer elects to make a lump-sum withdrawal. Which of the following statements is TRUE?

The portion representing principal from the nondeductible contributions is tax free, while the balance is taxable as ordinary income.

Traditional vs Roth IRA -tax deductions -withdrawal tax -distribution age

Traditional IRA- -tax deductible contributions -withdrawals are taxed ordinary -begin 59.5 not later than 70.5 Apr 1st Roth IRA- -non deductible contributions -withdrawals are not taxed -begin: 59.5 No later than:no age -5 year holding period contribution limits are the SAME!!!

A corporate profit-sharing plan or pension plan must be set up under a(n):

Trust -A plan's trustee assumes fiduciary responsibility for the plan.

Can you open an IRA under the age of 70.5?

Yes, must be earning income and out before one year after 70.5

How much can you contribute to IRA?

maximum limit or full dollars earned... which ever is LESS

The requirements of ERISA apply to pension plans established by

only private institutions retirement plans, not govt