Chapter 5 - Retirement plans and Social Security

If a retirement plan or annuity is "qualified", this means

It is approved by the IRS

Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages?

3%

What is the number of credits required for fully insured status for Social Security disability benefits?

40

An internal revenue code provision that specifically provides for an individual retirement plan for public school teachers is a(n)?

403(b) Plan (TSA)

The minimum number of credits required for partially insured status for Social Security disability benefits is

6 credits

If an annuitant dies during the accumulation period, what benefit (if any) will be included in the annuitants estate?

Accumulated cash value

under the 401k bonus or thrift plan, the employer will contribute

An undetermined percentage for each dollar contributed by the employee

All of the following are requirements of eligibility for Social Security disability benefits Except

Being age 65

In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse may receive retirement benefits?

Blackout Period

Which of the following scenarios will incur a 10% tax penalty on distributions?

Distributions are mad on a policy before age 59 1/2

When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions?

Distributions are taxable

For the retirement plan to be qualified, it must be designed for the benefit of?

Employees

All of the following statements are true regarding tax-qualified annuities EXCEPT

Employer contributions are not tax deductible

Which of the following is an eligibility requirement for all Social Security Disability Income benefits?

Have attained fully insured status

Which of the following is true about a defined benefit plan?

High-salaried employees with only a few years until retirement receive the highest contribution

Which of the following is NOT true regarding a nonqualified retirement plan?

It needs IRS approval

A 35-year-old spouse of the insured collects early distributions form her husband's retirement plan as a result of a divorce settlement. What penalties, if any, will she have to pay?

No penalties

An employer has sponsored a qualified plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?

Profit sharing plan

What is the primary purpose of a 401k plan?

Retirement

Which of the following are Social Security benefits?

Retirement, disability and survivors

Which type of retirement account does not require the owner to start taking distributions at age 72?

Roth IRA

The advantage of qualified plans to employers is

Tax-deductible contributions

All of the following would be different between qualified and nonqualified retirement plans EXCEPT

Taxation on accumulation

all of the following are general requirements of a qualified plan EXCEPT

The plan must provide an offset for social security benefits

all of the following would be eligible to establish a Keogh retirement plan EXCEPt

The president and employee of a family corporation

Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings?

They are tax deferred until withdrawn

Social Security was created to provide all of the following benefits EXCEPt

Unemployment income

When do full Social Security retirement benefits begin?

When the worker reaches age 65 and has earned the required amount of work credits.

If a company has a simplified Employee Pension plan, what type of plan is it?

a qualified plan for a small business

Employer contributions made to a qualified plan

Are subject to vesting requirements

How is Social Security funded?

Taxes imposed on a worker's earned income

What is the official name for the Social Security program?

Old Age survivors Disability insurance

All of the following types of distribution are considered exceptions to the early distribution rule and, therefore, are not subject to the penalty tax EXCEPT

Participants debt

A 60-year-old participant in a 401K plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?

The amount of the distribution is reduced by the amount of 20% withholding tax.

in a defined contribution plan,

The contribution is known and the benefit is unknown

Which of the following is TRUE of a qualified plan?

it has a tax benefit for both employer and employee