10 - Retirement Plans

What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan?

100

Premature IRA distributions are assessed a penalty tax of:

10%

all of the following statements about traditional individual retirement accounts are false, EXCEPT:

10% penalty is applied to withdrawals before age 59 1/2

Required minimum distributions for qualified retirement plans must start at age:

70 1/2

a trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid:

Mandatory income tax withholding on the transfer amount

Which of these is considered to be qualified retirement plan?

SIMPLE plan

Traditional individual retirement annuity (IRA) distributions must start by:

april 1st of the year the participant attains age 70 1/2

In a qualified retirement plan, the yearly contributions to an employee's account:

are restricted to maximum levels et by the IRS

How are Roth IRA distributions normally taxed?

distribution are received tax-free

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?

distribution is subject to federal income tax withholding

a 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $10,000 withholding. Which federal taxes apply if none of the funds were rolled over?

income taxes plus a 10% penalty tax on $30,000

When funds are rolled over straight from one IRA to another IRA, what percentage of the tax is withheld?

none

Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?

ordinary income tax and a 10% tax penalty for early withdrawal

a retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a:

profit-sharing plan

Which of the following describes using a 529 college savings plan?

putting money into an investment account that will have its withdrawals used for educational expenses