Chapter 10 "Retirement" Insurance Questions
An individual age 49 and below can contribute what maximum amount to a 403(b) plan? Select one: a. $18,500 b. $22,000 c. $35,000 d. $49,000
(A) $18,500
How much is the maximum annual contribution limit for an individual age 35 that has a traditional IRA? Select one: a. $5,500 b. $6,000 c. $49,000 d. $195,000
(A) $5,500
All of the following are defined contribution plans, EXCEPT: Select one: a. Individual annuity b. Money-purchase plan c. Pension plan d. Profit-sharing plan
(A) Individual annuity
Which of the following may not be used as an IRA investment tool? Select one: a. Life insurance policies b. Annuities c. Mutual funds d. Savings accounts
(A) Life insurance policies
What qualified retirement plan is a combination of an IRA and profit sharing plan, permitting the employer to tax-deduct up to 25% of contributions made to employees? Select one: a. SEP b. 403(b) c. Deferred compensation d. Keogh
(A) SEP A SEP is available to small employers. Contributions made to employees are deductible up to 25%.
All of the following are false regarding IRAs, EXCEPT: Select one: a. The maximum annual contribution amount is set by the law. b. Interest earned is not taxable. c. Spousal IRAs can be established for employed spouses. d. There are no penalties for withdrawing funds from an IRA.
(A) The maximum annual contribution amount is set by law.
Which of the following is not a nonqualified retirement plan? Select one: a. Split-dollar b. 401(k) c. Key person insurance d. Deferred compensation LH102034 Feedback
(B) 401(k)
Distributions from a qualified plan may be made without incurring the early distribution penalty tax for all of the following reasons, EXCEPT: Select one: a. The plan participant dies. b. Distribution made to pay for a new RV. c. The plan participant incurs a disability. d. Distribution made as a qualified rollover. LH101022 Feedback
(B) Distribution made to pay for a new RV
Which of the following is not a defined contribution plan? Select one: a. 401(k) b. Group deferred annuity c. CODA d. Money-purchase pension plan
(B) Group deferred annuity
All of the following are true regarding traditional IRAs, EXCEPT: Select one: a. If an individual does not have a retirement plan through their employer, the entire contribution to the IRA may be deducted from gross income up to the annual contribution limit. b. Interest earned on IRA contributions is taxable in the year earned. c. All withdrawals are taxed. d. The amount of money an individual can contribute to their IRA is limited, and indexed annually. LH103021 Feedback
(B) Interest earned on IRA contributions is taxable in the year earned.
Mildred is age 58. She withdraws a sum of money from her qualified plan. What is the penalty? Select one: a. 2% penalty tax b. 5% penalty tax c. 10% penalty tax d. 20% penalty tax
(C) 10% penalty tax
All of the following are characteristics of qualified retirement plans, EXCEPT: Select one: a. Contributions made by the employer are tax-deductible as a business expense. b. Interest earned on the investment is tax-deferred until funds are withdrawn. c. Contributions are not tax-deductible for the employee. d. Plans are non-discriminatory.
(C) Contributions are not tax-deductible for the employee
In order to establish an IRA, an individual must have: Select one: a. A qualified plan b. Dependent children c. Earned income d. A disability
(C) Earned income
IRAs are established and funded by: Select one: a. The federal government b. Social Security c. Individuals d. Employers
(C) Individuals
All of the following are CODA plans, EXCEPT: Select one: a. Tax-sheltered annuity b. 403(b) c. Money-purchase pension plan d. 401(k) LH102031 Feedback
(C) Money-purchase pension plan
Which of the following statements is true regarding IRAs? Select one: a. Spousal IRAs can be established for employed spouses. b. Interest earned is not taxable. c. The maximum annual contribution amount is set by the law. d. There are no penalties for withdrawing funds from an IRA. LH103013 Feedback
(C) The maximum annual contribution amount is set by the law
George is contributing to a qualified retirement plan at his company. What percentage of his contributions are vested immediately? Select one: a. 0% b. 25% c. 75% d. 100%
(D) 100%
Regardless of the vesting method used, by the end of a certain number of years employer contributions to a qualified retirement plan must vest: Select one: a. 0% b. 50% c. 75% d. 100%
(D) 100%
ERISA requires plan administrators to disclose which of the following information about pension plans and benefits plans? Select one: a. Summary Plan Description b. Summary of Material Modification c. Summary Annual Report d. All of the above
(D) All of the above
When can an individual make a distribution from a traditional IRA? Select one: a. Upon retirement after age 59 1/2 b. For education expenses c. For death or disability d. All of the above
(D) All of the above
Which of the following qualified plans uses employer contributions to a pension plan based on the employee's compensation and years of service with the company? Select one: a. Pension plan b. Target benefit pension plan c. Money-purchase pension plan d. All of the above
(D) All of the above
If Becky wants to take a distribution from her qualified retirement plan, she should know that distributions can be made: Select one: a. Only upon retirement. b. Only after age 59 1/2 c. Only after age 70 1/2 d. At any time.
(D) At any time.
Qualified retirement plans are grouped into two general categories called: Select one: a. Annuities and life insurance b. Keogh plans and IRAs c. 401(k) plans and 403(b) plans d. Defined benefit plans and defined contribution plans
(D) Defined benefit plans and defined contribution plans
What are the two general categories of qualified retirement plans? Select one: a. Annuities and life insurance b. Keogh plans and IRAs c. 401(k) plans and 403(b) plans d. Defined benefit plans and defined contribution plans LH102001 Feedback
(D) Defined benefit plans and defined contribution plans
All of the following are defined contribution plans, EXCEPT: Select one: a. CODA. b. 401(k). c. Money-purchase pension plan. d. Group deferred annuity.
(D) Group deferred annuity
What retirement plan blends an IRA with a profit-sharing plan and allows the employer to deduct up to 25% of contributions made to all employees? Select one: a. 401(k) b. Keogh c. SIMPLE d. SEP
(D) SEP
How much is the maximum annual benefit for a defined benefit plan? Select one: a. $50,000 b. $80,000 c. $220,000 d. $250,000
(C) $220,000
A qualified plan that is a combination of a defined contribution and defined benefit plan, in which a set contribution amount is made is called a: Select one: a. Tax-sheltered annuity b. 401(k) c. Money-purchase pension plan d. Target benefit pension plan LH102025 Feedback
(D) Target benefit pension plan
All of the following are characteristics of qualified retirement plans, EXCEPT: Select one: a. Employer's contributions are tax-deductible as a business expense. b. Employee contributions are made with pretax dollars. c. Contributions are not taxed until withdrawn. d. There are two types of qualified plans.
(D) There are two types of qualified plans
A nonqualified plan: Select one: a. Permits discrimination in favor of certain employees b. Must be approved by the IRS c. Has tax-deductible contributions d. Does not have tax-deferred interest
(A) Permits discrimination in favor of certain employees
All of the following may contribute to an IRA, EXCEPT: Select one: a. Joan, a contract engineer b. Bo, an unemployed college graduate c. Carly, an accountant working for the government d. Stuart, a commercial pilot
(B) Bo, an unemployed college graduate
What qualified plan resembles a profit-sharing plan, in which the employer establishes a trust fund and uses cash or new shares of stock to purchase existing shares? Select one: a. Keogh b. ESOP c. SIMPLE d. SEP
(B) ESOP