chapter 7 quiz

the advantage of qualified plans to employers is

tax-deductible contributions

a tax-sheltered annuity is a special tax-favored retirement plan available to

certain groups of employees only

all of the following apply to defined benefit plans except

contributions are tied to the company profits

under a defined benefit retirement plan, who determines what benefits a retied employee will receive

employer

which of the following is not true regarding a nonqualified retirement plan

it needs IRS approval

all of the following statements are true regarding tax-qualified annuities EXCEPT

employer contributions are not tax deductible

under the 401(K) bonus or thrift plan, the employer will contribute

an undetermined percentage for each dollar contributed by the employee

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

if a retirement plan or annuity is "qualified," this means

it is approved by the IRS

for a retirement plan to be qualified, it must be designed for the benefit of

employees

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

a 403(b) plan, commonly referred to as a TSA, is available to be used by

teachers and not-for-profit organizations

all of the following would be different between qualified and nonqualified retirement plans EXCEPT

taxation on accumulation

an internal revenue code provision that specifically provides for an individual retirement plan for public school teachers is a(n)

403(b)plan (TSA)

which of the following statements concerning a simplified employee pension plan (SEP) is incorrect?

SEPs are suitable for large companies

all of the following are general requirements of a qualified plan EXCEPT

the plan must provide an offset for social security benefits

which of the following describes the tax advantage of a qualified retirement plan

the earnings in the plan accumulate tax deferred

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

HR-10 (keogh plan)

which type of retirement account does not require the owner to start taking distributions at age 72

Roth IRA

who may contribute to a Keogh (HR-10) plan

self employed plumber

in a defined contribution plan,

the contribution is known and the benefit is unknown

all of the following employees may use a 403(b) plan for their retirement except

the CEO of a private corporation

under a SIMPLE plan, which of the following is true regarding taxation on both contributions and earnings

they are tax deferred until withdrawn

employer contributions made to a qualified plan

are subject to vesting requirements

what is the primary purpose of a 401(k) plan

retirement

SIMPLE plans require all of the following EXCEPT

at least 1,000 employees

which of the following scenarios will incur a 10% tax penalty on distributions

distributions are made on a policy before the age 59 1/2

all of the following are true of the federal tax advantages of a qualified plan except

at distribution, all amounts received by the employee are tax free.

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

simplified employee pension plan

which of the following characteristics applies to defined benefit plans but not defined contribution plans

the amount of contributions made by the employer is determined by an actuarial formula