CH9- Retirement Plans

Post-tax dollar contributions are found in

Roth IRA investments

Premature IRA distributions are assessed a penalty tax of

10%

All of the following statements about traditional individual retirement accounts are false EXCEPT

10% penalty is applied to withdrawals before the age 59 1/2

What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan?

100

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?

Distribution is subject to federal income tax withholding

Traditional Individual Retirement annuity (IRA) distributions must start by:

April 1st of the yer following the year the participant attains age 70 1/2

Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?

If Toms employment is terminated, 80% of the funds would be forfeited

In a qualified retirement plan, yearly contributions to an employee's account:

are restricted to a maximum level set by the IRS

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid:

mandatory income tax withholding on the transfer amount

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the

marital deduction

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?

20% is withheld for income taxes

How are Roth IRA distributions normally taxed?

Distributions are received tax-free

A 55 year old recently received a $30,000 distribution from a previous employer's 401K plan minus $6,000 witholding. Which federal taxes apply if none of the funds were rolled over?

Income taxes plus a 10%penalty tax on $30,000

Which of these retirement plans can be started by an employee, even if another plan is in existence?

Individual Retirement Account (IRA)

An employer that offers a qualified retirement plan to its employees is eligible to:

Make tax-deductable contributions to the plan

Which of the following is TRUE about a qualified retirement that is "top heavy" ?

More than 60% of plan assets are in key employee accounts

Which of the following is true if the ownder of an IRA names their spouse as beneficiary but then dies before any distributions are made?

The account can be rolled into the surviving spouses IRA

When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?

none

In an individual retirement account(IRA) rollover contributions are:

not limited by the dollar amount

What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?

50%