Chapter 6: Qualified Plans

In a defined contribution plan,

The contribution is known and the benefit is unknown.

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

The CEO of a private corporation.

Under a defined benefit retirement plan, who determines what benefits a retired employee will receive?

Employer

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 statements are true regarding tax-qualified annuities EXCEPT

Employer contributions are not tax deductible.

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

It needs IRS approval.

Which of the following characteristics applies to defined benefit plans but not defined contribution plans?

The amount of contributions made by the employer is determined by an actuarial formula.

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

A qualified plan for a small business

Employer contributions made to a qualified plan

Are subject to vesting requirements

SIMPLE Plans require all of the following EXCEPT

At least 1,000 employees.

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

Certain groups of employees only.

Which of the following is TRUE of a qualified plan?

It has a tax benefit for both employer and employee.

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

Keogh

Which type of retirement account does not require the owner to start taking distributions at age 72?

Roth IRA

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

The president and employee of a family corporation.

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.

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

They are tax deferred until withdrawn.

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

SEPs are suitable for large companies.

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

Simplified Employee Pension plan.

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

Someone who works 400 hours per year

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

Taxation on accumulation

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

Teachers and not-for-profit organizations. Correct

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

403(b) Plan (TSA).

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

It is approved by the IRS.

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