Unit 11

Kim is required to take a $2,000 minimum annual distribution from her IRA. She fails to and only takes a $1,000 distribution. Because of this failure, Kim will be subject to

a 50% penalty tax

Delbert is self-employed and sets up a retirement plan for himself. Delbert most likely sets up

a Keogh plan

Curtis knows that when he retires after age of 65 he will receive 80% of his salary as a pension. This is an example of

a defined-benefit plan

Carmen owns a business with 200 employees that provides a retirement plan whereby the business makes contributions on the employees behalf. Carmen's plan is most likely

an SEP

Premature distribution from a qualified plan or an IRA can result in the amount being taxed as income plus a penalty tax of

10%

At what age can people begin making catch-up contributions to their individual retirement plans?

50

At what age is an individual no longer subject to early withdrawal penalties under an IRA?

59 1/2

A rollover from one IRA to another or from qualified plan to an IRA Must be accomplished. How many days it the owner is to avoid an income tax liability on the amount rolled over?

60

Which of the following products cannot be used to fund an IRA?

Life insurance

All of the following individuals meet eligibility requirements for setting up an IRA EXCEPT

Mitch is unemployed but does receive rental income of $2,000 a month

Which of the following requirements of all employer-sponsored qualified retirement plans states that plans must benefit all regular employees, not just a select few?

Participation

Which of the following early withdrawals from an IRA would be subject to a 10% penalty?

Premature withdrawal at age 55 in order to pay off a credit card

Which of the following employee sponsored retirement plans does not require the employer to make a funding contribution every year?

Profit-sharing plans

Which of the following organizations would be eligible to offer a 403(b) arrangement?

Public school system

All of the following statements about profit-sharing plans are correct EXCEPT

the amount of annual contributions is set by employee