Ch 9 Retirement Plans
An employer that offers a qualified retirement plan to its employees is eligible to -avoid ERISA regulations -make tax-deductible contributions to the plan -make tax-deductible contributions to key employees only -make partial tax-deductible contributions to the plan
Make tax-deductible contributions to the plan
What type of employee welfare plans are not subject to ERISA regulations? -church plans -major medical plans -corporate -qualified plans
Church plans
Which plan is intended to be used by a sole proprietor and the employees of that business? -SEP Plan -Keogh Plan -Individual Retirement Account (IRA) -SIMPLE Plan
Keogh Plan
An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable? -no deduction allowed -$25,000 -$20,000 -$10,000
$25,000
Premature IRA distributions are assessed a penalty tax of -0& -10% -15% -20%
10%
How are Roth IRA distributions normally taxed? -10% penalty tax is applied -taxed as ordinary income -capital gains tax is applied -distributions are received tax-free
Distributions are received tax-free
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 This action would result in -only income tax on the amount withdrawn -income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan -continued tax-free accumulations in the bank savings account -only a 10% penalty on the withdrawal of funds
Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan
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
In a qualified retirement plan, the yearly contributions to an employee's account -are not tax-deductible -are restricted to minimum levels set by the IRS -are restricted to maximum levels set by the IRS -must be matched dollar-for-dollar by the employer
Are restricted to maximum levels set by the IRS
In an individual retirement account (IRA), rollover contributions are -subject to capital gains tax -subject to ordinary income tax -partially limited by dollar amount -not limited by dollar amount
Not limited by dollar amount