Qualified Plans

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

The plan has favorable tax treatment

What qualified plan is suitable for the self employed?

HR-10 or Keogh

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

Earned income

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

Employees

In what form of payment must the contributions to a traditional IRA be made?

In cash

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

No

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

Provide retirement income

Who qualifies for tax sheltered annuities, or 403(b) plans?

Employees of nonprofit organizations under Section 501(c)(3) and employees of public school systems

SIMPLE plans are available to groups of how many employees?

100 or less

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

6%

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

Profit sharing plan

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

10% penalty

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 earning accumulate tax deferred

What are some examples of qualified plans?

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

What type of plan is 401(k)?

Qualified profit-sharing plan