L24=Retirement Plans and Special Types of Accounts

Coverdell ESAs currently permit up to

$2,000 in annual contributions

Private, not-for-profit hospitals are considered eligible to offer

403(b) retirement plans to employees

Rollovers must be completed within

60 days of the distribution date to avoid unfavorable tax consequences.

Which factor is MOST important when assessing a defined benefit pension?

Age at which benefits can be taken Lump sum available at retirement Expected amount payable

Where would you be most likely to find an IPS?

Defined benefit plan

most accurate regarding employer-sponsored retirement plans

In a defined benefit plan, the client can have some reasonable certainty about the amount of income that will be received in retirement.

John and Martha, both in their early 40s, were divorced on November 22, 2018. Because Martha is unemployable, the terms of the divorce require John to pay Martha $300 per month in alimony and $1,000 per month in child support for their 4 children. Given that information, which of the following statements is CORRECT

John is able to deduct $3,600 from his taxable income.

When saving money for a child's college education, one consideration is the impact that those savings will have on the child's eligibility for financial aid. Funds saved in which of the following vehicles has the most detrimental effect on financial aid?

UTMA

A nonqualified plan designed to provide additional retirement benefits limited to a select group of management or highly-compensated employees is called

a SERP.

The prudent investor standard does not require

a guarantee of profit,

QTPs (Section 529 plans)

allow large contributions reaching as high as $250,000 and above.

Hardship withdrawals

are not permitted from IRAs They are a feature permitted in 401(k) plans.

Prohibited investments in an IRA would include

artwork stamps gems

Keogh plan participants

must work for the business. This may include a sole proprietor, a partner who works in the business, or an employee, but not a limited partner who contributes no personal services (meaning there is no compensation paid).

Coverdell ESAs are designed to

offer tax benefits to those individuals who wish to save money for a child/grandchild's higher-education expenses.

Qualified annuity plans offered under Section 403(b) of the Internal Revenue Code, referred to as tax-sheltered annuities (TSAs), are available to

physicians employed by a private, not-for-profit hospital. janitorial staff employed by a private, not-for-profit hospital. administrative assistants employed by a private, not-for-profit hospital.

A supplemental executive retirement plan (SERP) is a nonqualified plan designed to

provide additional retirement benefits limited to a select group of management or highly-compensated employees.

QTPs are extremely useful tools that provide

significant tax savings, allow for substantial investments for a child's education and provide a tool for avoidance of gift and estate taxes, if used correctly.

Under ERISA, a fiduciary must act in all of the following ways

solely in the interest of plan participants and beneficiaries with care, skill, prudence, and caution under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character in accordance with the governing plan documents unless they are not consistent with ERISA

ERISA serves as a basis of rules which protect

the beneficiaries and plan participants It is permitted for a fiduciary to transfer plan income or assets for the benefit of a plan beneficiary or a plan participant which they are entitled according to the provisions within the plan.

If withdrawals are made from qualified retirement programs with no extenuating circumstances,

the participant can roll over the proceeds into an IRA within 60 days and have no tax liability.

following is included in adjusted gross income on an individual's federal income tax return?

Dividends paid on preferred stock Salary and commissions Unemployment compensation

Which factor is least important when assessing a defined benefit pension

Investment performance of the fund Under a defined benefit plan, the pension payable is related to the length of service and usually expressed as a proportion of final earnings.The investment performance of the fund is therefore the least important factor to consider.

least suitable recommendation for a qualified money purchase plan account

Investment-grade municipal bond Because money in a qualified retirement plan account grows tax deferred regardless of the investment instrument, tax-exempt securities are unsuitable

All of the following are general principles of the prudent investor standard

diversification liquidity of investment reasonable expected returns

A premature distribution from an IRA would be exempt from the premature distribution penalty under all of the following circumstances

to pay for qualifying medical expenses to correct an excessive contribution to the IRA upon the death of the IRA owner