Group life insurance, retirement plans, and social security disability program (ucanpass) (exam fx)

What type of plan is a 401(k)?

Qualified profit-sharing plan

If a retirement plan is 'qualified', what does that mean?

The plan has favorable tax treatment

What is required to qualify an individual to contribute to a traditional IRA?

earned income

What is a penalty for excessive contributions to a traditional IRA?

6%

In what formal payment must the contributions to A traditional IRA be made?

In cash

SIMPLE plans are available to groups of how many employees?

No more than 100

In qualified plans, are employer contributions taxed as income to the employees?

No, employer contributions are not taxed as income to the employees

An employee respon sponsoring the qualified retirement plan for its employees where the employer contributes money whenever the business has profit. What if this type of plan called?

Profit sharing plan

What is the primary purpose of a 401(k) plan?

Provide retirement income

For a retirement plan to be qualified, it must be designed for whose benefit?

employees

What are the consequences of withdrawing funds from the traditional IRA prior to the age of 59 1/2?

10% penalty

What are some examples of qualified plans?

IRA, 401(k), HR10 (Keogh), SEP, SIMPLE

Who qualifies for tax sheltered annuities, or 403B plans?

Employees of nonprofit organizations under section 501c3 and employees of public school systems

What are the income tax benefits of a qualified plan

Employer contributions are tax deductible and are not taxed as income to the employee. The earnings accumulate tax deferred.

Look qualified plans is suitable for the self-employed?

HR-10 or Keogh