Chapter 10: Retirement Plans
Within how many days must a rollover be completed in order to avoid being taxed as current income? A) 30 B) 60 C) 90 D) 120
B) 60
ESOPs are typically invested in A) non-qualified plans B) IRAs C) employer stock D) annuities
C) employer stock
What does ESOP stand for? A) Employee Stock Ownership Plan B) Employee Savings Optional Plan C) Employee Savings Opportunity Plan D) Employer Stock Offering Program
A) Employee Stock Ownership Plan
How are Roth IRA's treated for tax purposes? A) Non-deductible contributions and tax-free distributions B) Deductible contributions and taxable distributions C) Distributions taxable as capital gains D) Distributions taxable as income tax
A) Non-deductible contributions and tax-free distributions
Dana is an employee who deposits a percentage of her income into her individual annuity. Her company also contributes a percentage into a separate company pension plan. What kind of annuity is this considered? A) Qualified retirement annuity B) Key employee retirement annuity C) Executive compensation plan D) Keogh annuity plan
A) Qualified retirement annuity
Non-deductible contributions are typically associated with a A) Roth IRA B) 401(k) C) Traditional IRA D) SEP Plan
A) Roth IRA
Employer contributions to qualified plans are A) tax-deductible by the employer B) taxable to the employee C) only available for key employees D) only found in 403(b) plans
A) tax-deductible by the employer
Erica is 35 years old and owns an IRA. At what age can she begin to receive distributions without a tax penalty? A) 55 B) 59 1/2 C) 62 D) 70 1/2
B) 59 1/2
A Roth IRA owner must be at least what age in order to make tax-free withdrawals? A) 59 1/2 and owned account for a minimum of 10 years B) 59 1/2 and owned account for a minimum of 5 years C) 70 1/2 and owned account for a minimum of 10 years D) 70 1/2 and owned account for a minimum of 5 years
B) 59 1/2 and owned account for a minimum of 5 years
When a qualified plan starts making payments to its recipient, which portion of the distributions is taxable? A) Principal B) Contributions made by employee C) Contributions made by employer D) Gains
B) Contributions made by employee
What area of group health insurance is regulated under the Employee Retirement Security Act of 1974 (ERISA)? A) Underwriting procedures B) Disclosure and reporting C) Workers' Compensation D) Long-term care
B) Disclosure and reporting
Which of these statements concerning Traditional IRAs is CORRECT? A) Earnings are not taxable when withdrawn B) Earnings are taxable when withdrawn C) Contributions are never tax-deductible D) Contributions are always made by the employer
B) Earnings are taxable when withdrawn
The following is NOT a federal requirement of a qualified plan? A) Must benefit a broad cross-section of employees B) Employee must be able to make unlimited contributions C) Vesting schedule must be defined D) Employer establishes the plan
B) Employee must be able to make unlimited contributions
Retirement plans are prevented from favoring highly compensated employees under which government regulation? A) Withdrawal fees B) Nondiscrimination C) Keogh regulation D) IRC Section 457
B) Nondiscrimination
Retirement plans cannot favor highly compensated employs. The government regulation that prevents this from happening is called A) HR-10 B) Nondiscrimination C) IRC Section 457 D) Defamation
B) Nondiscrimination
How are contributions made to a Roth IRA handled for tax purposes? A) Fully tax deductible B) Not tax deductible C) Partially tax deductible D) Conditionally tax deductible
B) Not tax deductible
An example of a tax-qualified retirement plan would be a(n) A) equity compensation plan B) defined contribution plan C) executive index plan D) 1035 exchange plan
B) defined contribution plan
A rollover from a Traditional IRA to another IRA MUST be done within ___ days to avoid tax consequences. A) 15 B) 30 C) 60 D) 90
C) 60
Within how many days must a Traditional IRA be rolled over to another IRA in order to avoid tax consequences? A) 30 B) 45 C) 60 D) 90
C) 60
Which of the following employers is required to follow ERISA regulations? A) A local government with 150 employees B) A church with 30 employees C) A local electrical supply company with 12 employees D) A Canadian company with 300 employees working in the United States
C) A local electrical supply company with 12 employees
Rob has a benefit at work which enables him to defer his current receipt of income and have it paid at a later date, when he will probably be in a lower tax bracket. Which benefit fits this description? A) Key person IRA B) Period certain annuity C) Deferred compensation option D) Income deferral option
C) Deferred compensation option
Who were Keogh plans designed to provide pension benefits for? A) Corporate officers B) Public school employees C) The self-employed D) Government employees
C) The self-employed
Under a Traditional IRA, interest earned is taxed A) only if withdrawn prior to age 59 1/2 B) according to the capital gains rate C) upon distribution D) during the accumulation phase
C) upon distribution
Under a 10-year vesting schedule, what percentage of employer contributions must be vested after 10 years of service? A) 25% B) 50% C) 75% D) 100%
D) 100%
Which of the following would disqualify a company's retirement plan from receiving favorable tax treatment? A) Contains a vesting schedule B) Contributions are applied with no regard to income C) Formed for the sole benefit of employees and their beneficiaries D) It is temporary
D) It is temporary
Which of these retirement plans do NOT qualify for a federal income tax deduction? A) SIMPLE Plan B) Traditional IRA C) Keogh Plan D) Roth IRA
D) Roth IRA
All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT A) Qualified college expenses B) First time home purchase C) Death of the participant D) Stock purchase
D) Stock purchase
Mike has inherited his father's traditional IRA. As beneficiary, he will pay ____ taxes on any money withdrawn. A) estate B) probate C) no D) income
D) income
