Qualified Plans
What are the consequences of withdrawing funds from a traditional IRA prior to the age of 59 1/2?
10% penalty
What qualified plan is suitable for the self-employed?
HR-10 (Keogh)
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
HR10
Which of the following describes the tax advantage of a qualified retirement plan?
The earnings in the plan accumulate tax deferred
How are contributions to a tax-sheltered annuity treated with regards to taxation?
They are not included as income for the employee, but are taxable upon distribution
In what form of payment must the contributions to a traditional IRA be made?
Cash
In employer-sponsored qualified plans, what are the benefits to the employer and employees?
Deductible contributions and taxed deferred growth
Which of the following scenarios will occur a 10% tax penalty on distributions?
Distributions are made on a policy before age 59 1/2
What is required to qualify an individual to contribute to a traditional IRA?
Earned income
For a retirement plan to be qualified, it must be designed for whose benefit?
Employees
Who qualifies for tax-sheltered annuities, or 403b plans?
Employees of nonprofit organizations under Section 501c3 and employees of public school systems?
What are the income tax benefits of a qualified plan?
Employer contributions are tax deductible and are not taxed as income to the employee. The earnings accumulate tax deferred
What are some examples of qualified plans?
IRA, 401(k), HR10 (Keogh), SEP, SIMPLE
Who qualifies for catch-up contributions to a qualified retirement plan?
Individuals who are 50 and older
SIMPLE plans are available to groups of how many employees?
No more than 100
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
In qualified plans, are employer contributions taxed as income to the employees?
No, employer contributions are not taxed as income to the employees
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
An employer is sponsoring a qualified retirement plan for its employees where the employer contributes money whenever the business has profit. What is this type of plan called?
Profit-sharing plan
What is the primary purpose of a 401k?
Provide retirement income
What type of plan is a 401k
Qualified profit-sharing plan
What is the primary purpose of a 401k
Retirement
An IRA purchased by a small employer to cover employees is known as a
Simplified employee plan
If a retirement plan is 'qualified', what does that mean?
The plan had favorable tax treatment
Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings?
They are taxed deferred until withdrawn
Can you name a few qualified retirement plans?
Traditional IRA Roth IRA SIMPLE SEP 401K
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)
403b Plan (TSA)
What is the penalty for excessive contributions to a traditional IRA?
6%
If a company has a Simplified Employee Plan, what type of plan is it?
A qualified plan for a small business