Retirement Incorrect Questions

Which transactions between a disqualified person and a qualified plan would be considered prohibited transactions under ERISA? The employer purchases a mortgage note which is currently in default for more than the fair market value. The employer sells a piece of raw (undeveloped) land to the qualified plan for a price substantially below fair market value. Loan to a 100% owner/participant on the same basis as every other participant as set forth in the plan documents. The purchase of employer stock for full and adequate consideration by a 401(k) plan. I and II only. II and III only. I, II and III only. I, II and IV only.

Solution: The correct answer is A. Any transaction between a disqualified person and the trust is considered a prohibited transaction. In Statement "I," the employer could purchase the mortgage note at a markup to future market value, thus giving the pension (and consequently his own individual retirement account) a big boost in value, then sell the note to someone else and take a loss on their personal income tax. Thus, in essence making additional contributions to the plan. Statement "II" would accomplish the same purpose. Employer's individual taxes would be reduced (lower profit on sale to the plan) but would have a dramatic increase in retirement plan assets.

Target benefit plans and defined benefit plans have which of the following characteristics in common? Minimum funding standards apply. Qualified joint and survivor annuity requirements apply. High investment earnings increase participant retirement benefits. The employer is obligated to provide a specified benefit in retirement. I and II only. I and III only. II and IV only. III and IV only.

Solution: The correct answer is A. Both plans are pension plans, therefore Statements "I" and "II" apply. Statement "III" applies only to the target benefit plan (because it is a DC plan) NOT the DB plan. Statement "IV" applies only to the DB plan NOT the target benefit plan.

Generally, which of the following are noncontributory plans? 401(k) and money purchase pension plans . 401(k) and thrift plans. Thrift plans and ESOPs. Money purchase pension plans and profit sharing plans. IV only. I and II only. III and IV only. I, II, III and IV.

Solution: The correct answer is A. Employers generally contribute to Money Purchase Pension Plans, ESOPs, and Profit Sharing Plans. These are considered non-contributory. Employees contribute (thus contributory plans) to 401(k)s and Thrift Plans.

Matt is a participant in a profit sharing plan which is integrated with Social Security. The base benefit percentage is 6%. Which of the following statements is/are true? The maximum permitted disparity is 100% of the base benefit level or 5.7%, whichever is lower. The excess benefit percentage can range between 0% and 11.7%. Elective deferrals may be increased in excess of the base income amount. The plan is considered discriminatory because it gives greater contributions to the HCEs. I and II only. I, II and IV only. II only. I, II, III and IV.

Solution: The correct answer is A. His base rate is 6% and the social security maximum disparity is 5.7% for 11.7% as the top of his range. Statement "III" is incorrect because integration does not affect voluntary deferrals by employees. Statement "IV" is incorrect because, done properly, integration is NOT considered discriminatory

A supplemental deferred compensation plan providing retirement benefits above the company's qualified plan AND without regard to Section 415 limits is known as: A Supplemental Executive Retirement Plan (SERP). A funded deferred compensation plan. An excess benefit plan. A Rabbi trust.

Solution: The correct answer is A. SERP supplements the pension plan without regard to limits imposed upon salary levels (i.e., maximum salary of $285,000 in 2020) or the maximum funding levels of Section 415. Do not confuse with an excess benefit plan which extends the benefits of a company's qualified plan above the Section 415 limits but still adheres to maximum salary limitations.

Cody is considering establishing a 401(k) for his company. He runs a successful video recording and editing company that employs both younger and older employees. He was told that he should set up a safe harbor type plan, but has read on the Internet that there is the safe harbor 401(k) plan and a 401(k) plan with a qualified automatic contribution arrangement. Which of the following statements accurately describes the similarities or differences between these types of plans? The safe harbor 401(k) plan has more liberal (better for employees) vesting for employer matching contributions as compared to 401(k) plans with a qualified automatic contribution arrangement. Both plans provide the same match percentage and the same non-elective contribution percentage. Employees are required to participate in a 401(k) plan with a qualified automatic contribution arrangement. Both types of plans eliminate the need for qualified matching contributions, but may require corrective distributions.

Solution: The correct answer is A. Safe harbor plans require 100% vesting, while 401(k) plans with QACAs require two year 100% vesting. The matching contributions are different for the plans. Employees are not required to participate in either plan. Both plans eliminate the need for ADP testing, which means that they eliminate the need for qualified matching contributions and corrective distributions.

Bertha, who is 54 years old, spent most of her career in the corporate world and now provides consulting services and serves as a director for several public companies. Her total self-employment income is $500,000. She is not a participant in any other retirement plan today. She would like to shelter as much of her self-employment earnings as possible by contributing it to a retirement plan. Which plan would you recommend? Establish a 401(k) plan. Establish a target benefit plan. Establish a Deferred Comp program for herself. Establish a SEP.

Solution: The correct answer is A. She will be able to defer $57,000 plus the catch up of $6,500 to the 401(k) plan, where she can only contribute $57,000 to the target benefit plan and the SEP. She cannot set up a deferred compensation plan and defer tax.

Byron is 46 years old and works for two employers, earning salaries of $52,000 and $48,000 respectively. One of his employers sponsors a 401(k) plan, and the other employer sponsors a 457(b) plan. For 2020, what is the maximum pre-tax elective deferral Byron can make in total to the two plans? A. $19,500. B. $39,000. C. $49,000. D. $57,000.

Solution: The correct answer is B. Contributions to a Section 457(b) plan do not count against the 401(k) plan limit. Therefore, Byron can contribute the maximum to each plan in the same year. For 2020, the contribution limit to each plan is $19,500, therefore, Byron can contribute at total of $39,000 ($19,500 + $19,500).

Which of the following accurately describes some attributes of non-qualified retirement plans? The employee will pay Table 1 costs each year on an "employer pay all" split dollar life insurance arrangement. The employer can deduct the premiums paid for a split-dollar life insurance arrangement in the year the premiums are paid. Death benefits from a split-dollar arrangement, both the employer and the employee's beneficiary's share, are generally tax free. If the employee's portion of the life insurance premium is greater than the P.S. 58 cost, the excess premiums "rolls forward" to a future year to accurately reflect the employee's cost basis. I and III only. II and IV only. I and IV only. I and II only.

Solution: The correct answer is A. Statement "II" is incorrect because the employer is unable to deduct any contributions to a non-qualified plan until the employee actually takes constructive receipt. In the traditional split-dollar arrangement, the employer has an interest in the cash values of the split-dollar policy equal to the amount of premiums paid, and therefore, there is never a deduction for premiums paid. Statement "III" - Because no tax deductions are taken for any premiums paid on the policy, the death benefits are tax-free. Statement "IV" - The employee is required to pay the Table 1 cost each year, without regard to premiums paid in previous years.

Myron has a life insurance policy in his qualified plan at work. He has come to you for advice about retirement and other financial planning needs. Which of the following is not correct about the life insurance in a qualified plan? He will be subject to income only if the policy in his qualified plan is a cash value type policy. The policy will be included in his gross estate if he were to die while still working. Part of the proceeds could be taxable to his beneficiary if it is a cash value policy. When he distributes the policy from his plan at retirement, he can convert it to an annuity within 60 days to avoid taxation.

Solution: The correct answer is A. Statements b, c, and d are correct. Statement a is false because all life insurance in qualified plans is subject to income when purchased, regardless of the type.

Which of the following statements concerning the OASDHI earnings test for the current year is correct? Some part-time work is allowed without the loss of retirement benefits for those under normal age retirement. The earnings test does not apply after the age of 62. Interest and dividends are included in the earnings test. The annual exempt amount for a person at normal age retirement is $48,600.

Solution: The correct answer is A. The earnings test does not apply at, or after, normal age retirement. The monthly exempt amount is $4,050 ($48,600) in 2020 for those months in the year of normal retirement age BEFORE you actually reach normal retirement age. The test uses only earned income. No passive or portfolio income is used in calculating the earnings.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) impacts an employee and employer in which of the following ways: An employee without creditable coverage can generally only be excluded by the group health insurance plan (if offered) for up to twelve months. The waiting period is reduced by the amount of "creditable coverage" at a previous employer. If the employee does not enroll in the group health insurance plan at the first opportunity, an 18-month exclusion period may apply. I and II only. I, II and III only. II and III only. II only

Solution: The correct answer is B. All three statements are true. If you have a pre-existing condition that can be excluded from your plan coverage, then there is a limit to the pre-existing condition exclusion period that can be applied. HIPAA limits the pre-existing condition exclusion period for most people to 12 months (18 months if you enroll late), although some plans may have a shorter time period or none at all. In addition, some people with a history of prior health coverage will be able to reduce the exclusion period even further using "creditable coverage." People with a history of prior health coverage will be able to reduce the exclusion period even further using "creditable coverage."

How do cash balance plans differ from traditional defined benefit pension plans? Traditional defined benefit plans are required to offer payment of an employee's benefit in the form of a series of payments for life while cash balance plans are not. Traditional defined benefit plans define an employee's benefit as a series of monthly payments for life to begin at retirement, but the cash balance plan defines the benefit in terms of a stated account balance. In Cash Benefit Plans, these accounts are often referred to as hypothetical accounts because they do not reflect actual contributions to an account or actual gains and losses allocable to the account, whereas in a Defined Benefit Pension Plan they do. Pension Plans are available to retirees in a lump sum payment, whereas Cash Balance Plans are not.

Solution: The correct answer is B. Answer "A" is incorrect because Cash Balance Plans are required to offer payment of an employee's benefit in the form of a series of payments for life. Answer "C" is incorrect, because neither plan shows actual gains or losses allocable to the account. Answer "D" is incorrect and stated exactly opposite of how it is in fact

Your client, John Smith, a sole-employee of a corporation with $100,000 income, has a maximum contribution profit-sharing plan. John has asked you to suggest a method for increasing his tax-deductible retirement plan contributions. The best option is: Contribute to an IRA in addition to his profit sharing plan. Adopt a 401(k) plan in addition to his profit-sharing plan. Increase his salary. Establish a money purchase pension plan in addition to his profit-sharing plan

Solution: The correct answer is B. Answer "A" is not tax deductible. Answer "B" would allow John to defer an additional $19,500 (2020) in salary without counting against the 404 test for profit-sharing plans. Answer "D" would increase costs without increasing deductions.

Randal was just hired by Chastain, Inc., which sponsors a defined benefit plan. After speaking with the benefits coordinator, Randal is still confused regarding eligibility and coverage for the plan. Which of the following is correct? The plan could provide that employees be age 26 and have 1 year of service before becoming eligible if upon entering the plan, the employee is fully (100%) vested. The plan may not cover Randal due to his position in the company, even if Randal meets the eligibility requirements. Part-time employees, those that work less than 1,000 hours within a twelve-month period, are always excluded from defined benefit plans. Generally, employees begin accruing benefits as soon as they meet the eligibility requirements.

Solution: The correct answer is B. Choice a is not correct because the general eligibility is age 21, not 26. Choice c is not correct because a plan could cover part time employees, but will generally not. Choice d is not correct because employees become part of a plan only as early as at the next available entrance date after meeting the eligibility requirements.

Spenser is covered under his employer's top-heavy New Comparability Plan. The plan classifies employees into one of three categories: 1) Owners, 2) Full-time employees, 3) Part-time employees. Assume the IRS has approved the plan and does not consider it to be discriminatory. The employer made a 4% contribution on behalf of all owners, 2% contribution on behalf of all Full-time employees and 1% contribution on behalf of all part time employees. If Spenser currently earns $50,000 per year and is a full-time employee, what is the contribution that should be made for him? $1,000 $1,500 $19,500 $57,000

Solution: The correct answer is B. For a profit sharing plan the contribution is limited to the lesser of $57,000 (2020) or covered compensation. Since the plan is top heavy, the plan must provide a benefit to all non-key employees of at least 3%, therefore; 50,000 × 3% = $1,500.

A non-qualified deferred compensation plan providing the key employee with a vested beneficial interest in an account is known as: A Supplemental Executive Retirement Plan (SERP). A funded deferred compensation plan. An excess benefit plan. A Rabbi trust.

Solution: The correct answer is B. If the employee has a non-forfeitable beneficial interest in a deferred compensation account, the IRS considers the plan "funded" and subject to current income tax due because the employee has constructive receipt of the assets.

In order to deduct a contribution to an IRA, which of the following requirements must be met? I. An individual must have earned income, either personally or jointly from a spouse. II. Must not be an active participant in an employer-sponsored qualified plan. III. Must be under the age of 70 1/2. IV. Must make contributions during the tax year or up to the date of filing the federal tax return for the tax year, including extensions. I and II only. I only. II and III only. IV only

Solution: The correct answer is B. In 2020, contributions are limited to the lesser of 100% of earned income or $6,000 or $7,000 if age 50 or over. Deductions may be taken even if an active participant, so being a non-participant is not a requirement. There are no age restrictions to make contributions to an IRA; the taxpayer must have earned income (SECURE Act 2019). Contributions must be made prior to April 15 (or the mandated filing date for the year.) No extension to make the contribution is allowed after that date, even though an extension to file the return is granted.

Cher, who just turned 57 years old, took early retirement so she could spend more time with her three grandchildren and to work on her golf game. She has the following accounts: 401(k) Roth account - she has a balance of $100,000. She only worked for the company for four years and contributed $15,000 each year to the Roth account. The company never contributed anything to her account. Roth IRA - she has a balance of $80,000. She first established the account by converting her traditional IRA ($50,000 all pretax) to the Roth IRA 4 years ago and has contributed $5,000 each of the last 4 years. Cher decided that she would take a distribution of half of each account ($50,000 from the Roth 401(k) and $40,000 from the Roth IRA) for the purpose of purchasing a Porsche Cayenne, which of course would be used to carry her new Ping golf clubs. Which of the following is correct regarding the tax treatment of her distributions? No tax, no penalty on either distribution. Taxation on $20,000 from the 401(k) Roth and a penalty on $20,000 from the Roth IRA. No taxation on the distribution from the 401(k) Roth, but income and penalty on $20,000 from the Roth IRA. Penalty of $2,000 on the Roth distribution and taxation and penalty on $20,000 of the Roth 401(k) distribution.

Solution: The correct answer is B. Neither distribution is qualified. Non-qualified distributions from a Roth account consist of basis and earnings on a pro rata basis. Therefore, 60% of the Roth account distribution is return of basis. The remaining 40% or $20,000 is subject to income tax. Because the distribution is from a qualified plan and she has separated after the attainment of age 55, there is no penalty. Non-qualified distributions from a Roth IRA come out in the order of contributions, conversions and then earnings. The first $20,000 is not subject to income tax or penalty because it is from contributions. The second $20,000 is from conversions, which have been subject to taxation. However, because she rolled them over within the last five years, she will have a penalty and there is no exception

Carleen has a vested 401(k) plan balance with her employer in the amount of $420,000. Eight months ago, Carleen borrowed $30,000 from the plan. She paid back the outstanding loan balance last month. What is the maximum loan Carleen can take from the plan today? A. $0. B. $20,000. C. $50,000. D. $160,000

Solution: The correct answer is B. Participants are generally eligible to borrow up to $50,000 or half of the vested balance in a 401(k) plan, whichever is less. However, the $50,000 limit is reduced by the difference between the highest outstanding balance of all of the participant's loans during the 12-month period ending on the day before the new loan and the outstanding balance of the participant's loans from the plan on the date of the new loan. Therefore, Carleen may borrow $20,000 from the 401(k) plan today ($50,000 less $30,000 previous loan).

Mayu made a contribution to his Roth IRA on April 15, 2014 for 2013. This was his first contribution to a Roth IRA. Over the years he has made $20,000 in contributions. On May 15, 2020 he withdrew the entire account balance of $45,000 to pay for his daughter's college education expense. He is 55 years of age. Which of the following statements is true? He will not include anything in income and will not be subject to the 10% early withdrawal penalty. He will include $25,000 in income but will not be subject to the 10% early withdrawal penalty. He will include $25,000 in income and will be subject to the 10% early withdrawal penalty on $25,000. He will include $45,000 in income and will be subject to the 10% early withdrawal penalty on $45,000

Solution: The correct answer is B. Roth distributions are tax free if they are made after 5 years and because of 1)Death, 2)Disability, 3) 59.5 years of age, or 4)First time home purchase. Although he met the 5 year rule, he did not meet one of the four qualifying reasons. His distribution does not received tax free treatment. The treatment for a non-qualifying distribution allows the distributions to be made from contributions first, then conversions, then earnings. In this case the distinction in distribution order is irrelevant since he withdrew the entire account balance. However, his contribution will be tax free, leaving only the $25,000 in earnings as taxable income. The 10% penalty does not apply to this distribution since he qualifies for the higher education exception to the penalty.

An actuary establishes the required funding for a defined benefit pension plan by determining: The lump sum equivalent of the normal retirement life annuity benefit of each participant. The amount of annual contributions needed to fund single life annuities for the participants at retirement. The future value of annual employer contributions until the participant's normal retirement date, taking an assumed interest rate, the number of compounding periods, and employee attrition into account. The amount needed for the investment pool to fund period certain annuities for each participant upon retirement.

Solution: The correct answer is B. Statement "A" is incorrect because it deals with a lump sum, NOT annual contributions. Statement "C" is incorrect because DB plans deal with present value calculations, not future values. Statement "D" is incorrect because DB plans deal with life annuities, NOT period certain annuities.

Which of the following correctly describes characteristics of group universal life insurance? The contract has a master group policy. The employer usually pays all of the policy premiums. Expenses are often lower than for individual universal life policies. These policies offer the potential for higher returns than whole life policies. The coverage is based on a combination of decreasing units of group term and accumulating units of single premium whole life. I and II only. III and IV only. IV and V only. I, II and III only.

Solution: The correct answer is B. Statement "I" applies to group term life. Statement "II" is false. Usually the employee is required to pay part or all of the premium cost of group universal life insurance. Statement "V" applies to a group whole life program.

Which of the following statements apply to distributions made from Individual Retirement Accounts (IRA)? I. Distributions to the IRA owner must begin by April 1 of the year following the year in which the owner reaches age 70 1/2 (if by 12/31/2019) or age 72 (if 70 1/2 after 12/31/2019). II. If funds in a rollover IRA (originated in an employer-sponsored qualified retirement plan) are not "tainted" with other contributions, the distribution may be eligible for 5-year forward averaging tax treatment. III. After the owner's death, the entire amount remaining in the IRA is included in the owner's gross estate for federal estate tax purposes. IV. Distributions taken prior to age 59 1/2 may be exempt from penalty only if the owner separated from service after age 55 and the original plan document allowed early retirement at age 55. I and II only. I and III only. II and IV only. I, III and IV only.

Solution: The correct answer is B. Statement "II" is incorrect because funds distributed from an IRA are always treated as ordinary income, regardless of source and 5 year forward averaging is no longer available for any distribution. Statement "IV" is incorrect because all distributions from an IRA not meeting the statutory exemptions are subject to the premature distribution penalty, regardless of source

A 10% penalty is assessed on non-exempted withdrawals from a qualified plan prior to age 59 1/2. Which of the following are exempt from the penalty? I. Distributions made to an active employee age 55 or older. II. Substantially equal periodic payments made to a terminated employee, based upon participant's remaining life expectancy. III. Pay-outs to a current employee due to immediate and heavy financial need. IV. Distributions to beneficiaries of a deceased employee. I and III only. II and IV only. II, III and IV only. I, II and IV only.

Solution: The correct answer is B. Statement "III" is incorrect. While hardship withdrawals may be allowed, the 10% premature distribution penalty will still apply if the employee terminates at or after age 55 (unless used for one of the statutory exemptions). Statement "I" is incorrect because the individual must attain age 55 and separate from service

Which of the following transactions by a qualified plan's trust are subject to Unrelated Business Taxable Income (UBTI)? A trust obtains a low interest loan from an insurance policy it owns and reinvests the proceeds in a CD paying a higher rate of interest. A trust buys an apartment complex and receives rent from the tenants. The trust buys vending machines and locates them on the employer's premises. The trust rents raw land it owns to an oil & gas developer. I and II only. I and III only. II and IV only. I, II and IV only.

Solution: The correct answer is B. Statements "I" and "III" are subject to UBTI because income from any type of leverage or borrowing within a plan is subject to UBTI. Additionally, any business enterprise run by a qualified plan is subject to UBTI. Statement "II" is not subject to UBTI (assuming it is not subject to leverage) due to a statutory exemption for rental income. Statement "IV" - The rental of raw land is also exempt. If the plan actually participated in the development of the oil & gas reserves, there would be UBTI.

Financial Training Team (FTT) develops training materials for finance professionals across the country. Chad, who just turned age 48, owns 15% of FTT and earns $200,000 per year and is a participant in his employer's 401(k) plan, which includes a qualified automatic contribution arrangement and the associated mandatory non-elective contribution. The actual deferral percentage test for the non-highly compensated employees is 2.5 percent. FTT made a 20% profit sharing plan contribution during the year to Chad's account. What is the maximum amount that Chad can defer in the 401(k) plan during 2020? $26,000 $11,000 $13,500 $19,500

Solution: The correct answer is B. The 401(k) plan avoids ADP testing because it is a QACA. Therefore, the ADP for the NHCE is irrelevant. However, the max that can be contributed is limited by IRC 415(c). The employer is contributing $40,000 to the profit sharing plan plus $6,000 as a non-elective contribution (3% of $200,000). Since the 2020 limit is $57,000, Chad can only contribute $11,000.

Safe harbor requirements to exclude leased employees from an employer's retirement plan include all but the following: The leasing company must maintain a money-purchase plan with a contribution rate of 10%. The retirement plan of the leasing company may be integrated. The leasing company's plan must provide immediate vesting. Safe harbor can be used until leased employees constitute 20% of the non-highly compensated work force.

Solution: The correct answer is B. Under the safe-harbor leasing rules the plan must provide a 10%, non-integrated money purchase plan with immediate vesting. No more than 20% of the employer's non-highly compensated employees may be leased to qualify for the safe harbor rules.

Seema owns a landscaping company in Phoenix and wants a low-cost retirement plan that permits her employees to make pre-tax contributions. She is planning on contributing 3% of eligible employee's pay each year. Which of the following plan's would be most appropriate plan for Seema to establish? A. 401(k) plan. B. Profit sharing plan. C. SIMPLE IRA. D. SIMPLE 401(k) plan.

Solution: The correct answer is C. A SIMPLE IRA would permit employees to make pre-tax contributions. Also, the plan is low cost, and the 3% contribution Seema is planning to make would satisfy the employer matching contribution requirements of a SIMPLE plan. As qualified plans, A, B & D will all have higher cost structures than a SIMPLE IRA and therefore do not meet Seema's requirement of a low-cost plan.

In order for a group term life insurance plan to be non-discriminatory, which of the following is true? At least 80% of all employees must benefit from the plan. At least 85% of the participants must be non-highly compensated employees. If the plan is part of a cafeteria plan, the plan must comply with the non-discrimination rules of Section 125. The bottom band of benefits must be no less than 10% of the top band with no more than a 2 times differential between bands.

Solution: The correct answer is C. A plan must benefit 70% of all employees or a group of which at least 85% are not key employees. If the plan is part of a cafeteria plan, it must comply with Section 125 rules. The difference between the bands in "D" must be no greater than 2.5 times the next smaller band with the bottom band being equal to no less than 10% of the top band

Retirement plans qualified under IRC Section 401(a) have many benefits for employers and employees. Which of the following is correct regarding qualified plans? All employer contributions to a qualified plan are fully deductible in the year of contribution. Payroll taxes are avoided for all contributions to a qualified plan. All qualified plan assets are held in a tax exempt trust and all earnings within the trust are deferred from taxation until distributed from the plan. The non-alienation of benefits rule under ERISA provides complete protection from all creditors, including the IRS, unless the funds are distributed from the plan.

Solution: The correct answer is C. Choice a is incorrect because there are limits to the deductibility of contributions to a qualified plan. Generally, only contributions up to 25% of covered compensation can be deducted for a year. Choice b is incorrect as employee contributions are subject to payroll tax. Choice d is incorrect as the IRS can get to assets in a qualified plan as well as spouses via a QDRO

Dr. Woods, age 29, is a new professor at Public University (PU) where he has a salary of $111,000. PU sponsors a 403(b) plan and a 457 plan. Dr. Woods also has a consulting practice called Damage Estimate Claims (DEC). He generates $200,000 of revenue and has $50,000 of expenses for DEC. Assume his self-employment tax is $19,790. What is the most that he could contribute to all of the retirement plans this year assuming he establishes a Keogh plan for DEC? $38,000 $56,000 $67,021 $71,021

Solution: The correct answer is C. Dr. Woods can contribute $19,500 to each of the 403(b) plan and the 457 plan. In addition, he can establish a Keogh plan and contribute 20% of his net self-employment income after deducting ½ self,-employment taxes. The 403(b) and 457 can both receive 19,500 (qualified and deferred comp plans). The Keogh needs to follow self-employment contribution rules - see the retirement pre-study book) $200,000 of income for DEC -$50,000 of expenses for DEC 150,000 Net income -9,895 (Assume his self-employment tax is $19,790, use ½) 140,105 × 20% (contribution rate / (1+contribution rate) = self-employed contribution rate) 28,021 In total 19,500 + 19,500 + 28,021 = 67,021

To retain its qualified status, a retirement plan must: Have pre-death and post-death distributions. Stipulate rules under what circumstances employee contributions are forfeited. Be intended to be permanent. Be established by the employer. I and II only. II, III and IV only. I, III and IV only. I, II, III and IV.

Solution: The correct answer is C. Employee contributions must be vested and cannot be required to be forfeited.

According to ERISA, which of the following is/are required to be distributed annually to defined benefit plan participants or beneficiaries? Individual Benefit Statement. The plan's summary annual report. A detailed descriptive list of investments in the plan's fund. Terminating employee's benefit statement. I, II and IV only. I and II only. II and IV only. III and IV only

Solution: The correct answer is C. Individual Benefit Statements are not required annually for defined benefit plans. They are however, required at least once every three years. Alternatively, defined benefit plans can satisfy this requirement if at least once each year the administrator provides notice of the availability of the pension benefit statement and the ways to obtain such statement. In addition, the plan administrator of a defined benefit plan must furnish a benefit statement to a participant or beneficiary upon written request, limited to one request during any 12-month period. There are no individual accounts in a defined benefit plan, so a specific listing of invested assets is not required.

Beth works for MG Inc. and was hired right out of school after graduating with a double major in marketing and advertising four years ago. Beth receives a $12,000 distribution from her designated Roth account in her employer's 401(k) plan as a result of her being disabled. Immediately prior to the distribution, the account consisted of $15,000 of investment in the contract (designated Roth contributions) and $5,000 of income. What are the tax consequences of this distribution? She will have $12,000 of income. She will have $5,000 of income. She will have $3,000 of income. She will have no income tax consequences resulting from the distribution

Solution: The correct answer is C. Non qualified distributions from a designated Roth account associated with a 401k are subject to tax on a pro-rata basis. Her total account is the 15,000 invested and the 5,000 of income for a balance of $20,000. Since 75% (15,000/20,000) of the value in the account consists of basis and the remaining 25% consists of earnings (5,000/20,000), that same ratio of basis to income will apply to the $12,000 distribution. It is not a qualified distribution because she has not held the account for at least five years

How is life insurance utilized to finance the obligation of an employer under a non-qualified deferred compensation plan? A company can defer compensation that would otherwise be due an employee and allow the employee to use this money to purchase life insurance listing himself as the owner of the policy. A company can defer future compensation that will be due an employee and use the amount to purchase life insurance in the employee's name while the company pays premiums for the policy. A company can defer compensation that would otherwise be due an employee and use the amount to purchase life insurance on the employee in the company's own name while paying the premiums for the policy. A company can defer compensation that otherwise would not yet be due an employee and use this projected amount of money to purchase life insurance in the employee's name while the company pays premiums for the policy.

Solution: The correct answer is C. Option "C" is the only answer which describes the workings of a deferred compensation package accurately. Option "A" is incorrect because the employee does NOT purchase the insurance. Option "B" is incorrect because it is compensation due NOW, not "future compensation." Option "D" is incorrect because the deferral is not "projected income."

Sherman, age 52, works as an employee for Cupcakes Etc, a local bakery. Cupcakes sponsors a 401(k) plan. Sherman earns $50,000 and makes a 10% deferral into his 401(k) plan. His employer matches the first 3% deferral at 100% and they also made a 5% profit sharing contribution to his plan. Sherman also owns his own landscaping business and has adopted a solo 401(k) plan. His landscaping business earned $40,000 for the current year. What is the total contribution that can be made to the solo plan, assuming his self-employment taxes are $6,000? $19,500 $21,000 $26,000 $28,400

Solution: The correct answer is D. An individual can defer up to $19,500 (2020) plus an additional $6,500 catch up for all of their 401(k) and 403(b) plans combined. Since he is 50 or older he can contribute the 19,500 + 6,500 = $26,000. Since he already contributed $5,000 into his employer plan he can still defer $21,000 ($26,000 - $5,000) into the solo plan. The employer contributions in this question are in addition to the employee deferral limit. Employer contribution into the solo plan: self-employment income $40,000 less 1/2 SE tax $3,000 Net $37,000 X 20% employer contribution $7,400 Total contribution to the solo plan = $21,000 + $7,400

Deepak made a contribution to his Roth IRA on April 15, 2018 for 2017. He was 58 years of age at the time he made time the contribution to his Roth IRA. Over the years he has made $30,000 in contributions. On May 15, 2020 the entire account balance was $50,000 and he took out $45,000 to pay for his wedding and honeymoon. Which of the following statements is true? He will not include anything in income and will not be subject to the 10% early withdrawal penalty. He will include $15,000 in income and will be subject to the 10% early withdrawal penalty on $15,000. He will include $15,000 in income but will not be subject to the 10% early withdrawal penalty. He will include $20,000 in income but will not be subject to the 10% early withdrawal penalty

Solution: The correct answer is C. Roth distributions are tax free if they are made after 5 years and because of 1) Death, 2) Disability, 3) 59.5 years of age, and 4) First time home purchase. He does meet a qualifying reason because he is over 59.5 in 2018 if he was 58 in 2017. However, he did not meet the 5 year holding period. He only has about 4.5 years. His distribution does not receive tax free treatment. The treatment for a non-qualifying distribution allows the distributions to be made from basis first, then conversions, then earnings. His basis will be tax free, leaving only the earnings as taxable income. Since he did not take the entire account balance he will only be subject to tax on the $15,000 of earning withdrawn. The 10% penalty does not apply to this distribution since he qualifies for the 59.5 exception to the penalty

Complex Corporation is ready to adopt a profit sharing plan for eligible employees. Which of the following groups would have to be considered in meeting the statutory coverage and participation tests? Employees of Simple Corporation, in which Complex owns 85% of the stock. Employees of Universal Corporation, in which Complex owns 55% of the stock. Rank and file workers at Complex who are union members with a contract that provides retirement benefits as a result of good-faith collective bargaining. Employees who are leased and covered by the leasing corporation's profit sharing plan. I only I and II I and IV II and III

Solution: The correct answer is C. Simple must be considered because Complex owns more than 80% and the leased employees must be considered because their leasing company's is not a pension plan. Universal would not be considered a subsidiary because it is only 55% not more than 80%. The union employees are excluded from testing by the IRC.

Chris Barry, 59-years old, has been offered early retirement with an option of a two-year consulting contract. He has been a participant for the past 20 years in both the company defined benefit plan and defined contribution plan. His account balance is $120,000 in the profit-sharingplan and the present value of accrued benefit of the defined benefit plan is $240,000. Both provide for a lump sum distribution. Which of the following option(s) is/are available under the lump sum distribution rules? Elect ten-year averaging on both plans. Roll over the taxable portions of both plans to an IRA. Elect long-term capital gains treatment on the DB plan. Elect five-year averaging on both plans. I, II and III only. I and II only. II only. IV only.

Solution: The correct answer is C. Statement "I" is incorrect because he is not old enough for ten-year averaging. Statement "II" is correct because the taxable portion of any lump sum distribution may be rolled over into an IRA. Statement "III" is incorrect because he is not old enough to qualify for pre-74 capital gain treatment nor does he even have any actual pre-74 capital gain in the plan as he has only been in the plan for the last 20 years. Statement "IV" is incorrect because five-year averaging was repealed in 1999.

Which of the following statements are accurate concerning integration ("permissible disparity") rules for qualified plans? The integration base level for a defined contribution plan can exceed the current year's Social Security taxable wage base. Permitted disparity levels reduce benefits in a defined benefit plan if employee retires early. It isn't possible to have a defined benefit plan formula which eliminates benefits for lower paid employees. I only. I and II only. II and III only. I and III only.

Solution: The correct answer is C. Statement "I" is incorrect because the integration levels cannot be higher than the Social Security wage taxable wage base. It may be lower, but cannot be higher. All other statements are accurate.

Ballistic Laser Operated Weapons company (BLOW) is a defense contractor who develops innovative weapons involving laser-guided systems. The company has maintained a defined benefit plan and a money purchase pension plan for many years. The current benefit formula for the defined benefit plan equals 3% times years of service times the average of the last three years of salary, limited to a maximum benefit of 70%. The money purchase pension plan calls for a 6% contribution for all employees who are covered under the plan. BLOW has been experiencing financial difficulties due to changes in the industry and from competitors and alternative technologies. Based on these challenges, the company is considering changing the benefits under the plans. Which of the following changes would not be permitted under the anti-cutback rules? Changing the benefit accrual for the defined benefit plan from 3% per year to 2% per year for future years. Reducing the money purchase pension plan contribution from 6% to 3% for future years. Decreasing the maximum benefit under the defined benefit plan from 70% to 50% for all future retirees. Switching the vesting for the money purchase pension plan from 3 year cliff to 2 to 6 graduated vesting.

Solution: The correct answer is C. The anti-cutback rules state that you cannot "cutback" benefits that have been accrued to date. Choice a and b affect future benefits. Choice c will more than likely impact current employees who may have accrued 70% benefits, but who have not yet retired. The change would result in a reduction in benefits and is not permitted. Choice d does is a permitted change and would not result in a reduciton in current vesting.

Daniel, age 55, just took a $12,000 withdrawal from his traditional IRA. Immediately before the distribution, the value of the traditional IRA was $210,000, and Daniel had a basis of $60,000. The amount of the early withdrawal penalty on this distribution is: A. $0. B. $343. C. $857. D. $1,200.

Solution: The correct answer is C. The early withdrawal penalty is based on the taxable portion of the distribution. The taxable portion of the IRA distribution is calculated as follows: Tax-free portion of distribution = (Basis / Fair Market Value) x Distribution Tax-free portion of distribution = ($60,000/$210,000) x $12,000 Tax-free portion of distribution = $3,429 Taxable portion of distribution = Total Distribution - Tax-Free Portion Taxable portion of distribution = $12,000 - $3,429 Taxable portion of distribution = $8,571 The penalty is 10% of the taxable distribution, or $857.

Carol, age 55, earns $200,000 per year. Her employer, Reviews Are Us, sponsors a qualified profit sharing 401(k) plan, which is not a Safe Harbor Plan, and allocates all plan forfeitures to remaining participants. If in the current year, Reviews Are Us makes a 18% contribution to all employees and allocates $7,000 of forfeitures to Carol's profit sharing plan account, what is the maximum Carol can defer to the 401(k) plan in 2020 if the ADP of the non-highly employees is 1%? $4,000 $19,500 $10,500 $26,000

Solution: The correct answer is C. The maximum annual addition to qualified plan accounts is $57,000. If Reviews Are Us contributes $36,000 ($200,000 × 18%) to the profit sharing plan and Lisa receives $7,000 of forfeitures, she may only defer $14,000 ($57,000 - $36,000 - $7,000) before reaching the $57,000 limit. However, she will also be limited by the ADP of the non-highly employees because she is highly compensated (compensation greater than $130,000). If the non-highly employees are deferring 1% then the highly compensated employees can defer 2% (1×2=2). Therefore, she is limited to a deferral of $4,000 (200,000 x 2%). Since she is 50 or older she can also defer the catch up amount of $6,500 which is not subject to the ADP limitation. Therefore, her maximum deferral is $10,500.

Abe's Apples has an integrated defined benefit pension plan. The plan currently funds the plan using a funding formula of Years of Service × Average of Three Highest Years of Compensation × 1.5%. If Geoffrey has been there for 40 years what is the maximum disparity allowed using the excess method? .75% 5.7% 26.25% 60%

Solution: The correct answer is C. The maximum disparity using the excess method is the lesser of the formula amount (40 years × 1.5%) or 26.25% (35 years × .75%). 35 years and .75% are the maximums that can be used under the excess method. Note: This level of knowledge is probably not tested on a regular basis, however, because it is part of the board's topic list this question was added to ensure that you could answer it if it came up on the test.

Which statements below accurately reflect characteristics of the Tax Sheltered Annuity (TSA)? Annuity payments from a TSA are taxed using the three-year rule. Employers may make matching contributions or contribute a fixed percentage. An employee under age 50, who contributed $8,000 to a 401(k) plan is limited to contributing a maximum of $11,500 to a salary reduction TSA. At the TSA owner's death, the full amount of proceeds paid to beneficiaries is included in the gross estate of the decedent. I, II and III only. I, II and IV only. II, III and IV only. I, III and IV only

Solution: The correct answer is C. Total salary reductions for qualified 401(k) and TSA is limited to $19,500 per year in 2020. Contributions to 401(k)s and 403(b)s are aggregated such that they may not exceed the total annual limit. The TSA has make-up provisions that allow certain employees to make up contributions that could have been made in the past but were not. All assets in qualified plans are part of the gross estate of the account owner. Employers may make matching contributions or contribute a fixed percentage of an employee's compensation to a TSA

Which of the following qualified plans would allocate a higher percentage of the plan's current contributions to a certain class or group of eligible employees? A profit sharing plan that uses permitted disparity. An age-based profit sharing plan. A defined benefit pension plan. A target benefit pension plan. I only. I and III only. II and IV only. I, II, III and IV.

Solution: The correct answer is D. All of the listed plans would allocate a higher percentage of a plans current cost to a certain class of eligible employees

A new client comes in after his spouse's death. The spouse was an active participant in a qualified retirement plan. There was a cost basis associated with the spouse's retirement account. Which of the following accurately describes the income tax implications due to death payments from the qualified plan as either an income for life or fixed period installment payments? When the benefits are from life insurance, the cash value portion is taxed under the annuity rules. When benefits are from "pure insurance," the amount is excludable from gross income. If the benefits are from funds not related to life insurance, the includible amount is taxed as ordinary income. If the benefits are not related to life insurance, the beneficiary's cost basis is equal to the participant's cost basis. II and IV only. I, III and IV only. I, II and IV only. I, II, III and IV.

Solution: The correct answer is D. All of these statements are accurate.

Your client, a single-filer, has an income of $80,000. Which of the following conditions would prevent a deductible IRA contribution from being made by your client? Participated in a Section 457 deferred compensation plan. No other retirement plans were available to the employee. Made contributions to a 403(b) plan. Received retirement payments from a pension plan at age 65 (no longer an employee at the sponsoring employer). Has account in previous employer's profit-sharing plan. Received no employer contributions. No forfeiture allocations were made. Eligible to participate in a defined benefit plan, but waived participation when it was calculated that employee retirement benefits would be greater with the IRA. I, II and IV only. II, IV and V only. II, III, IV and V only. II and V only.

Solution: The correct answer is D. An active participant is an employee who has benefited under one of the following plans through a contribution or an accrued benefit during the year: qualified plan; annuity plan; tax sheltered annuity (403(b) plan); certain government plans (does not included 457 plans); SEPs; or SIMPLEs. Statement I is a non-qualified deferred comp plan (not one of the plans listed above) and therefore not to be taken into consideration for active participation status. Statement II & V are on the list above. For a defined benefit plan, an individual who is eligible for the plan is automatically considered an active participant. Statement "III" is not active participation, rather it is retirement, and Statement "IV" as described without contributions or forfeitures is not "active participation," but a change in conditions regarding employer contributions or forfeitures could stem deductibility of IRA contributions.

Jacque's wife just lost her job and they had a death in the family. Jacque is planning on taking a hardship withdrawal from his 401(k) plan to pay for living expenses and funeral costs. Which of the following is correct regarding hardship withdrawals? Hardship withdrawals can be taken even if there is another source of funds that the taxpayer could use to pay for the hardship. Hardship withdrawals are beneficial because although they are taxable, they are not subject to the early withdrawal penalty. Hardship withdrawals can be taken from elective deferral amounts or vested employer contributions. Unless the employer has actual knowledge to the contrary, the employer may rely on the written representation of the employee to satisfy the need of heavy financial need.

Solution: The correct answer is D. Answer a is not correct as there must not be another source of funds. Answer b is not correct as they are generally subject to a penalty unless there is an exception under IRC 72(t). Answer c is not correct as a hardship distribution can only be taken from employee deferrals.

Which of the following statements regarding determination letters for qualified plans is true? When a qualified plan is created, the plan sponsor must request a determination letter from the IRS. An employer who adopts a prototype plan must request a determination letter from the IRS. If a qualified plan is amended, the plan sponsor must request a determination letter from the Department of Labor. A qualified plan which receives a favorable determination letter from the IRS may still be disqualified at a later date.

Solution: The correct answer is D. Determination letters are issued by the IRS at the request of the plan sponsor. The plan sponsor is not required to request a determination letter. Even if the determination letter is requested and approved, the IRS may still disqualify the plan.

Which of the following retirement plans would permit an employee (filing single status) making $100,000 a year to still make a fully deductible $6,000 contribution to an IRA in 2020? 401(k) 403(b) SEP 457

Solution: The correct answer is D. IRC Section 457 plans are nonqualified deferred compensation plan, and therefore do not make the employee an "active" participant in a qualified retirement plan. The 401(k) is a qualified plan and the 403(b) and SEP are 'wannabe' be plans that would make the employee an "active" participant.

Which of the following employees can be excluded from participation in a qualified plan? Age 22 with three years of service. Employee (with 13 months service) of 401(k) plan sponsor. Previously eligible employee terminated from service with 501 hours during plan year. Collective bargain covered employee of 2 years.

Solution: The correct answer is D. Maximum exclusions are: age 21, three years of service for a SEP, 2 years of service for all other plans except the 401(k) which has a maximum exclusion period of one year. Employees covered under a pension plan in a collective bargaining agreement can always be excluded from participation in the plan because they are already receiving pension contributions through the union plan.

Kyle had contributed $20,000 in nondeductible contributions to his traditional IRA over the years. This year the account balance was $52,000 and he made a withdrawal of $5,000. What amount is reported on Kyle's Form 1040? $5,000 only $1,923 only $3,077 only Both $5,000 and $3,077

Solution: The correct answer is D. On Form 1040 Kyle will report the total distribution of $5,000 and the taxable amount of the distribution of $3,077 calculated as $32,000 ÷ $52,000 × $5,000. account balance = $52,000 non-deductible contributions = $20,000 (not taxed at distribution) $32,000 would be taxable. Because there is both taxable and non-taxable money, each distribution is a pro-rata distribution of both. 32k/52k = .6154 5,000 × 61.54% = 3,076.92

Timothy is covered under his employer's Defined Benefit Pension Plan. He earns $500,000 per year. The Defined Benefit Plan uses a funding formula of Years of Service × Average of Three Highest Years of Compensation × 2%. He has been with the employer for 25 years. What is the maximum contribution that can be made to the plan on his behalf? $137,700 $230,000 $285,000 It is indeterminable from the information given

Solution: The correct answer is D. Read the question carefully. The question asks "what is the maximum contribution that can be made." Remember that for a defined pension plan the contribution must be whatever the actuary determines needs to be made to the plan

James and Cheryl Hansen, both age 42, are married with 9-year-old triplets. James is an attorney and makes $65,000 per year; he is not a partner. Cheryl earns an annual salary of $15,000 as a teacher's aide at the private, for-profit school the triplets attend. James' firm provides group permanent whole life and group survivor income benefit insurance. The school provides Cheryl with group term insurance coverage. James' Group Permanent Whole Life - This is a non-discriminatory plan designed to provide supplemental income to James during retirement. The firm picks up the entire premium for the plan. Cheryl is the designated beneficiary on the policy. The policy indicates that James has full vesting in the ownership of the policy. James' Group Survivor Income Benefit Insurance - This is a payroll deduction plan with James paying the entire premium. The plan is not considered a discriminatory plan. James has elected the survivor benefit that will pay benefits to his spouse and to any children under age 21. If James were to pass away, the following benefits would be paid to the beneficiaries: If spouse is sole beneficiary - 30% of salary. If children are sole beneficiaries - 40% of salary. If spouse and children are beneficiaries - 50% of salary. Cheryl's Basic Life Insurance Plan - This is a non-discriminatory, non-contributory plan. The death benefit equals five times annual salary for employees age 55 or younger, three times salary for those over age 55. James is the designated beneficiary on the policy. Given the above, which of the following statements accurately reflect the situation with James and Cheryl's group insurance coverages: If Cheryl died this year, James would receive death benefits of $45,000. James' employer can deduct the premiums for the permanent insurance in the year they are taxed to James. Cheryl's employer can deduct only the premiums for the basic group term life insurance related to coverage amounts over $50,000. James must include premiums related to the permanent insurance in income, because he has vested ownership rights to the policy. I and II only. I and IV only. II and III only. II and IV only.

Solution: The correct answer is D. Statement "I" is incorrect because Cheryl's life insurance benefit is $75,000 [$15,000 × 5]. Statement "III" is incorrect because Cheryl's employer can deduct all costs of the insurance in the year the premiums are paid. But, Cheryl will have inputted income for premiums paid on death benefit is excess of $50,000. The imputed income will be calculated at Table 1 (PS58) rates.

Which of the following are characteristics of a non-qualified deferred compensation agreement for an individual? It may provide for benefits in excess of qualified plan limits. The contribution underlying the agreement may NOT be structured as additional compensation to the employee. It must be entered into prior to the rendering of services to achieve deferral of compensation. The contribution underlying the agreement may be paid from the current compensation of the employee. I and II only. I and III only. II and III only. I, III and IV only.

Solution: The correct answer is D. Statement "II" is incorrect. The underlying contribution may be structured as additional compensation (a so-called salary continuation plan.) Statement "IV" represents a so-called pure deferred compensation plan.

Which of the following are correct statements about self-employed retirement plans? I. Benefits provided by a self-employed defined benefit plan cannot exceed the lesser of $230,000 or 100% of income in 2020. II. May be established by an unincorporated business entity. III. Contributions to "owner-employees" are based upon their gross salary. IV. Such plans are permitted to make loans to common law employee participants. I and II only. I and III only. II and IV only. I, II and IV only.

Solution: The correct answer is D. Statements "I", "II" and "IV" are correct. Loans are available to the common law employees of the firm. Statement "III" is incorrect because owner-employee contributions are based upon total earned income in the business, not just "salary." (Note: Remember S corporation owners are considered common law employees, so their contribution is based solely on salary and cannot include amounts for dividends or pass-through earnings shown on Schedule E of the 1040 form.)

Which of the following tasks are the primary responsibilities of a plan trustee? Determining which employees are eligible for participation in the plan, vesting schedule, and plan benefits. Preparing, distributing, and filing reports and records as required by ERISA. Investing the plan assets in a "prudent" manner. Monitoring and reviewing the performance of plan assets. I and III only. I and II only. II and IV only. III and IV only.

Solution: The correct answer is D. The duties explained in Statements "I" and "II" are responsibilities of the plan administrator.

Ginger is a 75 year old retired actress. Although she enjoyed a lucrative career, her decline in health has prevented her from working for the last few years. She is currently contemplating contributing to a Roth or Traditional IRA. Which of the following best describes her options? She can't contribute to a Traditional IRA because she is too old, but she can contribute to a Roth IRA. She can't contribute to a Roth IRA because she is too old, but she can contribute to a Traditional IRA. She can contribute to either a Traditional IRA or a ROTH IRA but is not entitled to a deduction. She can't contribute to either a Traditional or Roth IRA

Solution: The correct answer is D. There is no mention of earned income and "her health has prevented her from working." Therefore, she can't contribute to either one. You cannot assume earned income, and in fact, this question indicates that she hasn't worked at all for several years. If she did have earned income then she would be able to contribute as there is no age limit for Roth IRAs and was removed for traditional IRA under SECURE Act (2019)

Sam Davis, age 47, earning $100,000 per year, wants to establish a defined benefit plan. He employs 4 people whose combined salaries are $50,000 and range in age from 22-27. The average employment period is 3.5 years. Which vesting schedule is best suited for Sam's plan? A. 3-year cliff. B. 3-7 year graded. C. 100% immediate vesting. D. 2-6 year graded.

Solution: The correct answer is D. This plan will be top heavy, based upon the disparity between Sam's compensation and that of his employees. A is incorrect. Although a 3-year cliff vesting schedule would be permitted, it would allow his employees to be fully vested if they separated from service after the 3.5-year average employment period. B is incorrect. Since the plan will be top heavy, a 3-7-year graded vesting schedule would not be permitted. C is incorrect. Although a full and immediate vesting schedule would be permitted, it would allow his employees to be fully vested if they separated from service after the 3.5-year average employment period.

The maximum retirement benefit a participant in a target-benefit plan will actually receive depends on the: Initial actuarial computation according to the plan's formula. Amount of contributions determined in reference to the targeted benefit. Maximum annual additional amounts. Value of the participant's account at retirement.

Solution: The correct answer is D. While Answers "A", "B" and "C" help to increase the final account value, the retirement benefit is determined solely by the account value.