Chapter 9 Retirement Accounts Quiz Xcel Solutions
All of the following statements about traditional individual retirement plans are false EXCEPT:
10% penalty is applied to withdrawals
Premature IRA distributions are assessed a penalty tax of
10%
What is the maximum number of employees (earning at least $5000) that an employer can have to start a SIMPLE retirement plan?
100
An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?
20% is withheld for income taxes
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
Annuity
A 55 year old recently received a $30,000 distribution from a previous employers 401k plan, minus $6000 withholding. Which federal taxes apply if none of the funds were rolled over?
Income taxes plus a 10% penalty on $30,000
Which of these retirement plans can be started by an employee, even if another plan is in existence?
Individual Retirement Account (IRA)
Post-tax dollar contributions are found in:
Roth IRA investments
What does a 401(k) plan generally provide its participants?
Salary-deferral contributions
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
Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the
marital deduction
In an individual retirement account (IRA), rollover contributions are:
not limited by dollar amount
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?
50%
Traditional individual retirement annuity (IRA) distributions must start by:
April 1st of the year the participant attains age 70 1/2
Which of the following is true about a qualified retirement that is "top-heavy"?
More than 60% of plan assets are in key employees accounts
An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?
Distribution is subject to federal income-tax withholding
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
A retirement plan that sets aside part of the company's net income for distribution to qualified employees is called a:
Profit-sharing plan
Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?
The employee
A qualified profit sharing plan is designed to:
allow employees to participate in the profits of the company
How are Roth IRA distributions normally taxed?
Distributions are received tax-free
When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?
None
Which of the following are true if the owner of an IRA names their spouse as the beneficiary, but then dies before any distributions are made?
The account can be rolled into the surviving spouse's IRA
