Qualified Plans

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

10% penalty

What qualified plan is suitable for the self-employed?

HR-10 (Keogh)

Two attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose

HR10

Which of the following describes the tax advantage of a qualified retirement plan?

The earnings in the plan accumulate tax deferred

How are contributions to a tax-sheltered annuity treated with regards to taxation?

They are not included as income for the employee, but are taxable upon distribution

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

Cash

In employer-sponsored qualified plans, what are the benefits to the employer and employees?

Deductible contributions and taxed deferred growth

Which of the following scenarios will occur a 10% tax penalty on distributions?

Distributions are made on a policy before age 59 1/2

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

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

What are some examples of qualified plans?

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

Who qualifies for catch-up contributions to a qualified retirement plan?

Individuals who are 50 and older

SIMPLE plans are available to groups of how many employees?

No more than 100

A 35-year-old spouse of the insured collects early distributions from her husband's retirement plan as a result of a divorce settlement. What penalties, if any, will she have to pay?

No penalties

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

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

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?

Profit Sharing Plan

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 is the primary purpose of a 401k?

Provide retirement income

What type of plan is a 401k

Qualified profit-sharing plan

What is the primary purpose of a 401k

Retirement

An IRA purchased by a small employer to cover employees is known as a

Simplified employee plan

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

The plan had favorable tax treatment

Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings?

They are taxed deferred until withdrawn

Can you name a few qualified retirement plans?

Traditional IRA Roth IRA SIMPLE SEP 401K

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)

403b Plan (TSA)

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

6%

If a company has a Simplified Employee Plan, what type of plan is it?

A qualified plan for a small business