Retirement Other Insurance Concepts

SIMPLE Plans require all of the following EXCEPT

At least 1,000 employees.

Two attorneys at law and 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. Thy would likely choose

HR-10 (Keogh Plan).

Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT?

SEPs are suitable for large companies.

Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages?

3

Employer contributions made to a qualified plan

Are subject to vesting requirements

The advantage of qualified plans to employers is

Tax deductible contributions.

Which of the following is TRUE of a qualified plan?

It has a tax benefit for both employer and employee.

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

It is approved by the IRS.

Which of the following is NOT true regarding a nonqualified retirement plan?

It needs IRS approval.

Which of the following is an IRS qualified retirement program for the self-employed?

Keogh

A tax-shelter annuity is a special tax-favored retirement plan available to

Certain groups of employees only.

If a company has a Simplified Employee Pension plan, what type of plan is it?

A qualified plan for a small business

What is the primary purpose of a 401(k) plan?

Retirement

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

Simplified Employee Pension plan.

Under the 401(k) bonus or thrift plan, the employer will contribute

An undetermined percentage for each dollar contributed by the employee.

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

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

Which of the following applicants would NOT qualify for a Keogh Plan?

Someone who works 400 hours per year

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

Teachers and not-for-profit organizations.

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.

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.

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

The plan must provide an offset for social security benefits.

All of the following would be eligible to establish a Keogh retirement plan EXCEPT

The president and employee of a family corporation.

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)

403(b) Plan (TSA).

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

Taxation on accumulation

Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings?

They are tax deferred on both contributions and earnings until funds are withdrawn.

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

Employer contributions are not tax deductible.

Which type of retirement account allows contributions to continue beyond age 70 1/2 and does not force distributions to start at age 70 1/2?

Roth IRA

Who may contribute to an HR-10 plan?

Self-employed plumber

All of the following employees may use a 403(b) plan for their retirement EXCEPT

The CEO of a private corporation