Chapter 5 - Retirement plans and Social Security
If a retirement plan or annuity is "qualified", this means
It is approved by the IRS
Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages?
3%
What is the number of credits required for fully insured status for Social Security disability benefits?
40
An internal revenue code provision that specifically provides for an individual retirement plan for public school teachers is a(n)?
403(b) Plan (TSA)
The minimum number of credits required for partially insured status for Social Security disability benefits is
6 credits
If an annuitant dies during the accumulation period, what benefit (if any) will be included in the annuitants estate?
Accumulated cash value
under the 401k bonus or thrift plan, the employer will contribute
An undetermined percentage for each dollar contributed by the employee
All of the following are requirements of eligibility for Social Security disability benefits Except
Being age 65
In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse may receive retirement benefits?
Blackout Period
Which of the following scenarios will incur a 10% tax penalty on distributions?
Distributions are mad on a policy before age 59 1/2
When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions?
Distributions are taxable
For the retirement plan to be qualified, it must be designed for the benefit of?
Employees
All of the following statements are true regarding tax-qualified annuities EXCEPT
Employer contributions are not tax deductible
Which of the following is an eligibility requirement for all Social Security Disability Income benefits?
Have attained fully insured status
Which of the following is true about a defined benefit plan?
High-salaried employees with only a few years until retirement receive the highest contribution
Which of the following is NOT true regarding a nonqualified retirement plan?
It needs IRS approval
A 35-year-old spouse of the insured collects early distributions form her husband's retirement plan as a result of a divorce settlement. What penalties, if any, will she have to pay?
No penalties
An employer has sponsored a qualified plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?
Profit sharing plan
What is the primary purpose of a 401k plan?
Retirement
Which of the following are Social Security benefits?
Retirement, disability and survivors
Which type of retirement account does not require the owner to start taking distributions at age 72?
Roth IRA
The advantage of qualified plans to employers is
Tax-deductible contributions
All of the following would be different between qualified and nonqualified retirement plans EXCEPT
Taxation on accumulation
all of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits
all of the following would be eligible to establish a Keogh retirement plan EXCEPt
The president and employee of a family corporation
Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings?
They are tax deferred until withdrawn
Social Security was created to provide all of the following benefits EXCEPt
Unemployment income
When do full Social Security retirement benefits begin?
When the worker reaches age 65 and has earned the required amount of work credits.
If a company has a simplified Employee Pension plan, what type of plan is it?
a qualified plan for a small business
Employer contributions made to a qualified plan
Are subject to vesting requirements
How is Social Security funded?
Taxes imposed on a worker's earned income
What is the official name for the Social Security program?
Old Age survivors Disability insurance
All of the following types of distribution are considered exceptions to the early distribution rule and, therefore, are not subject to the penalty tax EXCEPT
Participants debt
A 60-year-old participant in a 401K plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?
The amount of the distribution is reduced by the amount of 20% withholding tax.
in a defined contribution plan,
The contribution is known and the benefit is unknown
Which of the following is TRUE of a qualified plan?
it has a tax benefit for both employer and employee