Ch 13: Retirement Plans and Education Saving Plans

In 2020, a self-employed person earns $140,000. What is this person's maximum allowable contribution into a Defined Contribution Keogh Plan?

$57,000

A single individual who is not an active participant in a qualified retirement plan, earned $28,000. The maximum tax-deductible contribution that can be made to an IRA is?

$6,000

In 2020, a single individual who is not an active participant in a qualified retirement plan earned $18,000. The maximum tax deductible contribution that can be made to an IRA is

$6,000

One of your clients is a 24 year old student and wants to plan for paying for all of her higher education expenses. Of the choices below, which would be the most appropriate choice for your client?

A 529 Education Savings Plan

Which of the following types of retirement plans is designed primarily for use by self-employed individuals?

A Keogh or HR-10 Plan

Which of the following is TRUE regarding Traditional IRAs?

Beginning date for first required minimum distributions (RMDs) is April 1st of the year following the calendar year in which the owner reaches age 72.

A wife owns a small business and has net income of $100,000 for the year. Her husband was hired by her as an accountant for her business and was paid $30,000. Which of the following is true concerning the amount that can be contributed to an IRA by the wife and/or husband?

Each or either can deposit $6,000 into their own IRA.

A client at the firm has a birthday of January 1st. The client has a Traditional IRA and he is concerned about required minimum distributions (RMDs) and the penalties associated with not taking RMDs. The client turns 72 this year. Which of the following is TRUE in this scenario?

Given that the client turns 72 this year, RMDs are not required until April 1st of the following year.

Which of the following is true about a defined benefit plan?

High salaried employees with only a few years to retirement benefit the most.

Which of the following taxes would be deferred on contributions made by an individual to her 401(k) plan?

Income tax

Which of the following statements about Roth IRA plans is TRUE?

The qualified distributions of a Roth IRA plan are not taxable.

As BOM, one of your RRs comes to you with a letter to a client about a 529 education savings plan account. The client's child is expected to graduate from high school in the near future. What else should the RR disclose in relation to this plan?

Your RR needs to state that withdrawals from 529 plans are tax-free when used for qualified education costs.

A 45-year-old customer leaves his employer and takes payout on their 401(k) Plan assets with the intent to roll the plan into a Traditional IRA. The client fails to do so within the required time period. The client will have to pay

both a 10% penalty on the amount paid out and ordinary income tax on the amount paid out.