10 - Retirement Plans
First-time homebuyers are able to withdraw up to how much from their qualified IRAs without incurring the 10% early withdrawal penalty? $2,500 $5,000 $7,500 $10,000
$10,000
What is another name for a Keogh plan? Roth IRA HR10 plan Rollover plan 1040 plan
HR10 plan
XYZ Corp. has implemented a qualified retirement plan. This plan may NOT discriminate against employees under the age of 21 in favor of highly compensated employees in favor of employees with higher seniority against stockholders
in favor of highly compensated employees
Premature IRA distributions are subject to a penalty tax of 0% 10% 15% 20%
10%
What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan? 25 50 100 250
100 employees
What is the excise tax rate minus the IRS imposes aged 70.5 or older who do not take the required minimum distributions from their qualified retirement plan? 30% 40% 50% 60%
50%
Traditional individual retirement annuity (IRA) distributions must start by age 59.5 age 65 April 1st of the year following the year the participant attains age 59.5 April 1st of the year following the year the participant attains age 70.5
April 1st of the year following the year the participant attains age 70.5
How are qualified Roth IRA distributions normally treated for tax purposes? 10% penalty tax taxed as ordinary income capital gains tax is applied received income tax-free
Received income tax-free
Tim is retired and has recently separated from his wife. He receives benefits from a qualified retirement plan through his former employer. The plan's trustee has decided to split these benefit payments between Tim and his estranged wife. This decision is likely in violation of which IRS rule? reasonable expectations alienation of benefits minimum coverage indemnity of benefits
alienation of benefits
An employee welfare plan exempt from ERISA regulations would be church plans indemnity plans split dollar plans accident only plans
church plans
Which tax would an IRA participant be subjected to on distributions received prior to age 59.5? 10% penalty tax taxed as ordinary income capital gains tax income and penalty tax
income tax and penalty tax
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid mandatory income tax withholding on the amount transferred paying transfer fees paying trustee fees ever paying income taxes on the distributions
mandatory income tax withholding on the amount transferred
When funds are transferred directly from one IRA to another IRA, what percentage of the tax is withheld? 10% 20% 30% none
none
Who is normally considered to be the owner of a 403(b) tax-sheltered annuity? the 403(b) custodian the financial institution the employer the participating employee
the participating employee
An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction? 10% is withheld for income taxes 20% is withheld for income taxes 30% is withheld for income taxes nothing is withheld
20% is withheld for income taxes
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? 20% of the funds are subject to taxes 80% of the funds are invested in a separate account If Tom's employment is terminated, 20% of the funds could be forfeited If Tom's employment is terminated, 80% of the funds could be forfeited
If Tom's employment is terminated, 20% of the funds could be forfeited
The IRS has a "minimum coverage" rule regarding qualified retirement plans. This rule states that each qualified plan is required to benefit a broad cross-section of employees benefit a minimum number of employees provide a minimum amount of income per year provide benefits to a company's executive team
benefit a broad cross-section of employees
A qualified profit-sharing plan is designed to allow key employees to participate in the profits of the company distribute a portion of company earnings to its employees keep key employees from leaving the company allow employees to elect company officers
distribute a portion of company earnings to its employees
A life insurance producer's underwriting duties may include approving or declining a life insurance application seeking additional information requested by the insurance company ordering an MIB report determining the rate classification of the applicant
seeking additional information requested by the insurance company
Contributions made by an employee to a qualified retirement plan are required to be subject to income taxes fully refundable nonforfeitable subject to a vesting schedule
subject to a vesting schedule
According to the IRS, a company may NOT do which of the following in regards to funds in a qualified retirement plan? transfer the funds to a new custodian invest the funds in mutual funds transfer vested funds to terminated employees repossess the funds for business purposes
repossess the funds for business purposes
What does a 401(k) plan generally provide its participants? tax-free distributions salary-deferral distributions salary-deferral option a defined retirement benefit
salary-deferral option
Which of the following statements is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made? surrender charge is applied the account can be rolled into the surviving spouse's IRA distributions will be received tax-free if surviving spouse age is over 59.5 future distributions are payable to the owner's estate
the account can be rolled into the surviving spouse's IRA
Which of the following situations would allow funds to be deposited into a rollover IRA? an individual receives a $100,000 inheritance a family receives $1,000,000 in a wrongful death lawsuit an employee quits her job and receives $50,000 from her qualified plan a policyowner surrenders his life insurance policy's $25,000 cash value
an employee quits her job and receives $50,000 from her qualified plan
