Chp. 9 Retirement Plans

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction? A.) 10% is withheld for income taxes B.) 20% is withheld for income taxes C.) 30% is withheld for income taxes D.) Nothing is withheld

20% is withheld for income taxes

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age? A.) 70 1/2 B.) 65 C.) 55 D.) 59 1/2

D.) 59 1/2

What does a 401(k) plan generally provide its participants?

Salary-deferral contributions

An employer that offers a qualified retirement plan to its employees is eligible to: A.)avoid ERISA regulations B.) make tax-deductible contributions to the plan C.) make tax deductible contributions to key employees only D.) make partial tax-deductible contributions to the plan

B.) make tax-deductible contributions to the plan

All of the following statements about traditional individual retirement accounts are false EXCEPT A.) 10% penalty is applied to withdrawals after age 59 1/2 B.) Withdrawals are normally tax-free to the recipient C.) 10% penalty is applied to withdrawals before age 59 1/2 D.) Contributions are not tax deductible

C.) 10% penalty is applied to withdrawals before age 59 1/2

Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? A.) 20% of the funds are subject to taxes B.) 80% of the funds are invested in a separate account C.) If Tom's employment is terminated, 20% of the funds would be forfeited D.) If Tom's employment is terminated, 80% of the funds would be forfeited

C.) If Tom's employment is terminated, 20% of the funds would be forfeited

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? A.) Distribution is subject to capital gains tax B.) Distribution is subject to ordinary income tax C.) Distribution is subject to a tax penalty D.) Distribution is subject to federal income tax withholding

D.) Distribution is subject to federal income tax withholding

Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?

The employee

A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over?

Income taxes plus a 10% penalty tax on $30,000

When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?

None