SIE C.7.S.2.

Which statement is TRUE regarding a Roth IRA? A. Roth IRAs allow for tax-free distributions B. Roth IRA contributions are tax deductible C. Roth IRAs are subject to Required Minimum Distributions (RMDs) D. Roth IRAs are not subject to income limitations

A

Which statement is TRUE regarding contributions to, and distributions from, tax qualified retirement plans? A. Contributions are typically made with "before-tax" dollars B. Contributions are typically made with "after-tax" dollars C. Distributions are 100% tax free D. Distributions are taxable at lower capital gains rates

A

A 50 1/2 year old self-employed individual has a balance of $200,000 in his HR 10 plan. This balance is composed of $140,000 of contributions and $60,000 of earnings. The individual decides to withdraw $100,000 from the plan. Which statement is TRUE? A. The entire withdrawal is taxed as ordinary income B. Since half the account balance has been withdrawn, the withdrawal is taxed at 50% of ordinary rates C. Under FIFO rules, this withhdrawal is not subject to a 10% penalty tax D. Since half of the account has been withdrawn, the withdrawal is subject to half of the 10% penalty tax

A

A husband and wife both work, earning $150,000 each. Both are age 45 and are covered by employer-sponsored qualified retirement plans. What is the maximum deductible contribution that can be made to an IRA in 2020? A. 0 B. $3,000 each C. $6,000 each D. $7,000 each

A

A self-employed individual purchases variable annuity units with funds contributed to a Keogh Account. Once the contract is annuitized, the payments are: A. 100% taxable B. partially taxable and a partial tax free return of capital C. 100% tax free return of capital D. tax deferred until the annuitant reaches the age of 72

A

An unmarried person, earning $100,000 a year, is not covered by a pension plan. This person makes the maximum tax deductible Individual retirement accountcontribution for this year. If that individual joins a corporation at the same salary, and is included in that company's pension plan, which statement is TRUE? A. Annual contributions to the IRA can continue but will not be tax deductible B. Annual contributions to the IRA can continue and continue to be tax deductible C. Annual contributions to the IRA must cease D. The IRA must be closed and the balance transferred to the pension plan

A

Distributions from 403(b) plans are: A. 100% taxable at ordinary income tax rates B. 100% taxable at capital gains tax rates C. Partially taxable at ordinary income tax rates and a partial tax-free return of after-tax investment D. Partially taxable at capital gains tax rates and a partial tax-free return of after-tax investment

A

For the year 2020, the maximum annual contribution to an Individual Retirement Account for a single person is: A. 100% of income or $6,000, whichever is less B. 100% of income or $6,000, whichever is greater C. 100% of income or $12,000, whichever is less D. 100% of income or $12,000, whichever is greater

A

In 2020, a self-employed individual has an adjusted gross income of $100,000 per year. This person has no other retirement plan and contributes $6,000 to an Individual Retirement Account. Which statement is TRUE? A. The contribution is fully tax deductible B. The contribution is partially tax deductible C. The contribution is not tax deductible D. The contribution is prohibited because income limitations are exceeded

A

Individual Retirement Account contributions can be made with: A. Cash B. Exempt Securities C. Non-Exempt Securities D. All of the above

A

To avoid penalties, funds cannot be withdrawn from a Keogh retirement plan before age: A. 59 1/2 B. 65 C. 72 D. 75

A

Under ERISA provisions, a pension fund manager that wishes to write naked call options: A. can only do so if explicitly allowed in the plan document B. can do so if the plan document allows for options transactions C. can do so without restriction D. is prohibited under ERISA requirements

A

A 55-year old individual has just retired after working for the same employer for 20 years. She will collect an annual pension benefit of $55,000, but is not yet ready to stop working.She has lined up a part-time job that will pay $4,000 this coming year. How much can she contribute to a Traditional Individual Retirement Account for her first year in retirement? A. 0 B. $4,000 C. $5,000 D. $6,000

B

A divorced woman with 2 young children has just re-entered the workforce part time and earns $3,000 from this work. She collects another $2,400 per year in alimony payments. The woman wishes to make a contribution to an Individual Retirement Account this year. Which statement is TRUE? A. No contribution can be made because the woman received alimony payments B. A contribution can be made based only on the income earned from part-time work C. A contribution can be made based only on the alimony payments received D. A contribution can be made based on both the earned income from part-time work and the alimony payments received

B

A married couple earning over $124,000 in year 2020, where both are covered by pension plans, wishes to contribute to an IRA. Which statement is TRUE? A. Annual tax deductible contributions of $12,000 can be made to an IRA B. Annual $12,000 contributions to the IRA can be made, but they are not tax deductible C. Annual tax deductible contributions of $6,000 can be made to an IRA D. No contributions can be made

B

A pension plan maintained by a not-for profit corporation is known as a (n) : A. 401(k) plan B. 403(b) plan C. SEP IRA D. HR 10 plan

B

A person can start withdrawing from his or her Individual Retirement Accountwithout penalty at age: A. 50 1/2 B. 59 1/2 C. 60 1/2 D. 72

B

A smaller company with 75 employees wishes to establish a retirement plan. Some of the employees are highly paid, but most are part-time low wage earners. The company would like to maximize contributions for the highly-paid employees to keep these talented individuals. The company has erratic cash flow but is profitable overall. What type of retirement plan would be the best for the company? A. 401(k) Plan B. Profit Sharing Plan C. Keogh Plan D. 457 Plan

B

An individual owns a bicycle repair business as a sole proprietorship. He does not make a lot of money, but he does have $5,000 available for investment this year. The BEST recommendation for this individual is to make a $5,000 contribution to a(n): A. Traditional IRA B. Roth IRA C. SEP IRA D. SIMPLE IRA

B

If a person under the age of 59 1/2 becomes disabled and wishes to withdraw money from her IRA, which statement is TRUE? A. The withdrawal is tax free B. The withdrawal is subject to income tax but no penalty C. The withdrawal is subject to income tax plus a 10% penalty tax D. The withdrawal is not subject to income tax but will incur a 10% penalty tax

B

In 2020, a self-employed person earning $200,000 also has $100,000 of investment income. This person wishes to open a Keogh Plan. Their maximum permitted contribution is: A. $20,000 B. $40,000 C. $57,000 D. $67,000

B

Payments received by the owner of a non-tax qualified variable annuity are: A. 100% taxable as investment income B. only taxable to the extent of earnings above the holder's cost basis C. only taxable to the extent of the holder's cost basis D. non-taxable

B

Which statement is TRUE regarding RMDs (Required Minimum Distributions) from IRA accounts? A. The RMD is fixed at 10% per year B. The RMD is based on the life expectancy of the account beneficiary C. If the RMD is not taken, a penalty tax of 10% is applied D. If the RMD is not taken, a penalty tax of 25% is applied

B

A 45-year old man earns $150,000 per year and is covered by his employer's 401(k) Plan. He quits his job and moves to a new company that has no retirement plan, but will also pay him $150,000 per year. He should be advised to: A. continue to make maximum annual contributions to his 401(k) Plan B. roll his 401(k) Plan into a Roth IRA and continue to make annual contributions to the Roth IRA C. roll his 401(k) Plan into a Traditional IRA and continue to make annual contributions to the Traditional IRA D. request a distribution of the 401(k) and use the proceeds to buy a variable annuity

C

All of the following are permitted investments in Individual Retirement Accounts EXCEPT: A. U.S. minted gold coins B. U.S. issued securities C. Commodity futures D. Bank certificates of deposit

C

All of the following are true statements about Individual Retirement AccountsEXCEPT: A. the earliest a taxpayer may make an annual contribution is January 1st of that tax year B. the latest a taxpayer may make an annual contribution is April 15th of the following tax year C. if the taxpayer obtained a 4 month filing extension, he can make the annual contribution up to the extension date D. annual contributions may be made even if the person is covered by another qualified retirement plan

C

All of the following persons can contribute to a 403(b) plan EXCEPT: A. professor at a university B. nurse at a hospital C. student at a college D. secretary at a foundation

C

All of the following statements are true regarding defined benefit plansEXCEPT: A. contributions made to the plan can vary from year-to-year B. employees with the highest salaries and the fewest years to retirement benefit the most C. benefits paid to employees consists of a tax-free return of capital and a taxable return of earnings D. actuarial tables are used to determine contribution rates for each employee

C

An individual who maintains a Keogh Plan is approaching the age of 72. Which statement is TRUE? A. Distributions from the plan must commence on the date that the individual reaches the age of 72 B. Distributions from the plan must commence on April 1st prior to the year the individual reaches the age of 72 C. Distributions from the plan must commence on April 1st following the year the individual reaches the age of 72 D. Distributions are not required, but may be taken at the discretion of the individual

C

Distributions from Roth IRAs are subject to a penalty if withdrawals are made within: A. 1 year of original contribution B. 3 years of original contribution C. 5 years of original contribution D. 10 years of original contribution

C

Distributions from an Individual Retirement Account must commence by age: A. 50 1/2 B. 59 1/2 C. 72 D. 75 1/2

C

For an Individual Retirement Account contribution to be deductible from that year's tax return, the contribution must be made by no later than: A. April 15th of that year B. December 31st of that year C. April 15th of following year D. December 31st of the following year

C

If a corporation has an unfunded pension liability, this means that: A. inflation has eroded the value of the portfolio funding the plan B. the plan is in default because the existing retirees' benefit claims are not being met C. the expected future value of fund assets is less than projected benefit claims D. the expected future value of fund assets is more than projected benefit claims

C

In 2020, a self-employed person earning $400,000 wishes to open a Keogh Plan. The maximum yearly contribution is: A. $6,000 B. $27,000 C. $57,000 D. $87,000

C

Retirement plans that must comply with ERISA requirements include all of the following EXCEPT: A. Defined benefit plans B. Profit sharing plans C. Federal Government plans D. Payroll deduction savings plans

C

The maximum contribution in the year 2020 into an IRA for an individual, age 50 or older, is: A. $1,000 B. $6,000 C. $7,000 D. $9,000

C

Which of the following is a characteristic of Defined Contribution Plans? A. If the corporation has an unprofitable year, the contribution may be omitted B. The assets in the plan grow tax free C. The annual benefit varies based on length of service D. This type of plan is not subject to ERISA requirements

C

Which statement is TRUE about non-contributory defined benefit retirement plans? A. Contribution amounts are the same for each employee B. All benefit payments are tax free C. Annual benefit payments are fixed D. Annual benefit payments are taxable at lower capital gains rates.

C

Which statement is TRUE when comparing a Roth IRA to a Traditional IRA? A. Anyone with earned income can open a Roth IRA B. Anyone with investment income can open a Traditional IRA C. Roth IRAs are not available to high-earning individuals D. Traditional IRAs are not available to high-earning individuals

C

Which statements are TRUE about Roth IRAs for tax year 2020? A. The maximum permitted contribution for an individual is $3,000 B. The maximum permitted contribution for a couple is $6,000 C. If an individual contributes $6,000 to a Traditional IRA in that year, no additional contribution to a Roth IRA is permitted D. If an individual contributes $6,000 to a Traditional IRA in that year, an additional $6000 contribution to a Roth IRA is permitted

C

Who can establish a SIMPLE IRA? A. Not-for-profit employer B. Individual C. For-profit employer with 100 employees or less D. Self-employed individual

C

403(b) Plans are permitted to invest in all of the following EXCEPT: A. Variable Annuities B. Mutual Funds C. Fixed Annuities D. Common stocks

D

A 40 year old man wishes to remove monies from his IRA to fund his child's summer vacation. The customer has: A. no tax liability B. regular income tax liability only on the amount withdrawn C. 10% penalty tax only on the amount withdrawn D. both regular income tax liability and 10% penalty tax on the amount withdrawn

D

A 50 year old individual leaves a corporate employer and receives a $50,000 lump sum distribution from the pension plan. He rolls over $30,000 of the funds within 60 days into an IRA and deposits the rest to his checking account. The individual pays: A. no tax B. income tax on the $50,000 distribution C. tax on the $30,000 rollover D. tax on the $20,000 not rolled over

D

A person, age 55, wishes to withdraw $25,000 from a Keogh plan. The tax will be: A. 10% of the amount withdrawn B. 10% of the amount in the plan C. ordinary income tax + 10% penalty tax on the amount in excess of contributions D. ordinary income tax + 10% penalty tax on the amount withdrawn

D

All of the following statements are true about SEP IRAs EXCEPT: A. the plan is established by the employer B. the plan allows for flexible contribution amounts C. the amount that can be contributed is significantly greater than for a Traditional IRA D. the contributions made are not deductible

D

Contributions to Keogh Plans must be made by: A. December 31st of the calendar year in which the contribution may be claimed on that person's tax return B. December 31st of the calendar year after which the contribution may be claimed on that person's tax return C. April 15th tax filing date of the calendar year after which the contribution may be claimed on that person's tax return D. August 15th tax filing date permitted under an automatic extension of the calendar year after which the contribution may be claimed on that person's tax return

D

Contributions to qualified retirement plans, other than IRAs, must be made by: A. December 31st of the calendar year in which the contribution may be claimed on that person's tax return B. April 15th of the calendar year in which the contribution may be claimed on that person's tax return C. April 15th of the calendar year after which the contribution may be claimed on that person's tax return D. The date on which the tax return is filed with the Internal Revenue Service

D

In 2020, a customer earns $300,000 as a self-employed doctor, and contributes the maximum permitted amount to a Keogh plan. The doctor has a full time nurse earning $30,000 per year. The contribution to be made for the nurse is: A. $3,000 B. $3,750 C. $6,000 D. $7,500

D

In an Individual Retirement Account, a 6% penalty tax will be imposed for: A. failing to make a contribution to an Individual Retirement Account by April 15th B. the purchase of a mutual fund in an Individual Retirement Account C. premature distributions from an Individual Retirement Account D. excess contributions to an Individual Retirement Account

D

What is the first age at which distributions must commence from a 401(k) Plan? A. 59 1/2 B. April 1st of the year after reaching age 59 1/2 C. 72 D. April 1st of the year after reaching age 72

D

Which statement is TRUE regarding contributions to, and distributions from, non-tax qualified retirement plans? A. Contributions are made with "before-tax" dollars B. Distributions are 100% tax free C. Distributions are 100% taxable D. Distributions are partially tax free, with the amount above the original cost basis being taxed

D