Chapter 9: retirement Plans
which of the following is true is the owner of an IRA names the spouse the beneficiary but then dies before and distributions are made
the account can be rolled into the surviving spouses IRA
An individual working part time has an annual income of 25,000 if this individual has an IRA hat is the max deductible IRA contributions allowable
2500
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
Traditional Individual Retirement Account (IRA) distributions must start by
April 1st of year following the year the participant attains age 70.5
post tax dollar contributions are found in
Roth IRA investments
Premature IRA distributions are assessed a penalty tax of
10%
abAll of the following statements about tradition individual accounts are false EXCEPT:
10% penalty is applied to withdrawals before 59.5
How are Roth IRA distributions normally taxed
Distributions are received tax-free
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?
If toms employment is terminated , 20 % of the funds would be forfeited.
Which of these retirement plans can be started by an employee, even if another plan is in existence?
Individual Retirement account (IRA)
a sole proprietor may use this plan only if the employees of this business are included
KEOgh pension plan
When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?
None
a qualified sharing profit plan is designed to
allow employees to participate in the profits of a company
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
annuity
in an individual retirement account IRA rollover contributions
are not limited by dollar amount
in a qualified retirement plan the yearly contributions to an employees account
are restricted to maximum levels set by the IRS
What type of employee welfare plans are not subject to ERISA regulations?
church plans
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 a 10% penalty upon funds withdrawn from qualified plan
a 55 year old recently received a 30,000 distribution from a previous employer 401 k plan- minus 6000 withholding-which federal taxes apply if none of the funds were rolled over
income taxes plus 10% penalty on the 30,000
An employer that offers a qualified retirement plan to its employees is eligible to
makes tax deductible contributions to the plan
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid
mandatory income tax withholding on the transfer amount
Rick recently died and left behind an individual IRA in his name; his widow was forwarded the balance of the IRA, the window qualifies for the
marital deduction
which of the following is true about qualified retirement plan that is top heavy
more than 60% of planned assets are in key employees account
which tax would an IRA participant be subjected to on distribution received prior to 59.5
ordinary income tax + tax penalty for early withdraw
A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a
profit sharing plan
what does a 401 k plan generally provide its participants
salary deferekk contributions
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?
59.5
How long does an individual have to rollover funds from an IRA or qualified plans
60 days
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%
what is the maximum number of employees earning at least 5000 that an employer can have in order to start a simple retirement plan
100
an individual participant personally received rollover funds from a profit sharing plan. what is the income tax withholding requirements for this transaction
20 % withheld for income taxes
Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?
the employee