Chapter eleven retirement plans xcel

All of the following statements about traditional individual retirement accounts or false except

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

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

100

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?

20% is withheld for income taxes

What is the exercise tax rate the IRS imposes on individuals age 70 1/2 or older who do not take the required minimum distribution's from their qualified retirement plan

50%

Required minimum distribution's for qualified retirement plans Must start at age

70 1/2

Traditional individual retirement annuity distributions must start by

April 1 of the year following the year the participant attained age 70 1/2

In a qualified retirement plan the yearly contributions to an employer's account

Are restricted to maximum level set by the IRS

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

Which of the following is true about a qualified retirement that is top-heavy

More than 60% of plan assets are in key employee accounts

When friends 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

Who were Keogh plans designed to provide pension benefits for?

self-employed

Premature IRA distributions are assessed a penalty tax of

10%

How are Roth IRA distributions normally taxed?

Distributions are received tax-free

A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over?

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

Traditional 401(k) plans are funded by

Pretax contributions

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 withdraws used for educational expenses

Which of these is considered to be a qualified retirement plan

SIMPLE plan

What does a 401(k) plan generally provide its participants?

Salary-deferral contributions

Which of the following is true if the owner of an IRA names their spouse as beneficiary but then dies before any distributions are made

The account can be rolled into the surviving spouse's IRA

A qualified profit-sharing plan is designed to

allow employees to participate in the profits of the company

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

In an individual retirement account (IRA), rollover contributions are

not limited by dollar amount