Chapter 8: Retirement Plans
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
Annuity
Traditional individual retirement annuity (IRA) distributions must start by
April 1st of the year following the year the participant attains age 70 1/2
Premature IRA distributions are assessed a penalty tax of
10%
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?
If Tom's employment is terminated, 20% of the funds would be forfeited
Which plan is intended to be used by a sole proprietor and the employees of that business?
Keogh Plan
How are Roth IRA distributions normally taxed?
distributions (withdrawals) are received tax-free
An employer that offers a qualified retirement plan to its employees is eligible to
make tax-deductible contributions to the plan
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
income tax and 10% penalty assessed upon funds withdrawn from the Qualified Plan
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid
mandatory income tax withholding on the transfer amount
A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a
Profit-sharing plan