LIFE ONLY_Chapter 7-Qualified Plans

Which type of retirement account does not require the owner to start taking distributions at age 72? A. Standard IRA B. Traditional IRA C. Roth IRA D. Non qualified IRA

C. Roth IRA

The advantage of qualified plans to employers is A. No lump-sum payments B. Taxable contributions C. Tax-deductible contributions D. Tax-free earnings

C. Tax-deductible contributions

A 403(b) plan, commonly referred to as a TSA, is available to be used by A. Postal employees B. Self-employed persons C. Teachers and not-for-profit organizations D. Government workers

C. Teachers and not-for-profit organizations

Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings? A. Employer's matching contribution can be 50% of employee's salary B. 75% of employee's contributions are taxed C. They are tax deferred until withdrawn D. Taxes must be paid in full

C. They are tax deferred until withdrawn

Employer contributions made to a qualified plan A. May discriminate in favor of highly paid employees B. Are after-tax contributions C. Are taxed annually as salary D. Are subject to vesting requirements

D. Are subject to vesting requirements

Under a defined benefit retirement plan, who determines what benefits a retired employee will receive? A. Employee B. Beneficiary C. Federal Government D. Employer

D. Employer

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n) A. 403(b) Plan (TSA) B. Keogh Plan C. Roth IRA D. SEP

A. 403(b) Plan (TSA)

Which of the following is TRUE of a qualified plan? A. it has a tax benefit for both employer and employee B. It does not need to have a vesting schedule C. It may discriminate in favor of highly paid employees D. It may allow unlimited contributions

A. It has a tax benefit for both employer and employee

Which of the following is NOT true regarding a non qualified retirement plan? A. Contributions are not currently tax deductible B. It can discriminate in benefits and selecting participants C. Earnings grow tax deferred D. It needs IRS approval

D. It needs IRS approval

Who may contribute to a Keith (HR-10) plan? A. Manager of a store B. Corporate executive C. Partner with at least 5% ownership D. Self-employed plumber

D. Self-employed plumber

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? A. 10 B. 3 C. 5 D. 7

B. 3

All of the following apply to defined benefits plans EXCEPT A. They are qualified plans and cannot discriminate B. Contributions are tied to the company profits C. Benefits are based on a specified formula that incorporates years of service, salary and age of retirement D. The employer is responsible for providing promised retirement benefits

B. Contributions are tired to the company profits

Which type of retirement account does not require the owner to start takin distributions at age 72? A. Traditional IRA B. Roth IRA C. Nonqualifed IRA D. Standard IRA

B. Roth IRA

Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT? A. Employer contributions are not included in the employee's gross income B. SEPs are suitable for large companies C. SEPs allow the employer to make annual tax deductible contributions up to 25% of an employee's earned income D. SEPs have a higher tax deductible contribution limit than an IRA

B. SEPs are suitable for large companies

All of the following employees may use a 403(b) plan for their retirement EXCEPT A. The Vice President of a charitable organization B. The CEO of a private corporation C. A school bus driver D. A part-time classroom aide

B. The CEO of a private corporation

In a defined contribution plan, A. The contribution and the benefit are known B. The contribution is known and the benefit is unknown C. The benefit is known and the contribution is unknown D. The contribution and the benefit are unknown

B. The contribution is known and the benefit is unknown

Under the 410(k) bonus or thrift plan, the employer will contribute A. 30% of what the employee contributes B. 75% of what the employee contributes C. An undetermined percentage for each dollar contributed by the employee D. All of the money to the plan

C. An undetermined percentage for each dollar contributed by the employee

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT A. Funds accumulate on a tax-deferred basis B. Employee and employer contributions are not counted as income to the employee for income tax purposes C. At distribution, all amounts received by the employee are tax free D. Employer contributions are tax deductible as ordinary business expense

C. At distribution, all amounts received by the employee are tax free

SIMPLE Plans require all of the following EXCEPT A. No more than 100 employees B. Employees must receive a minimum of $5,000 in annual compensation C. At least 1,000 employees D. No other qualified plan can be used

C. At least 1,000 employees

Which of the following scenarios will incur a 10% tax penalty on distributions? A. Distributions are made to the beneficiary B. Distributions are made as part of a qualified rollover C. Distributions are made on a policy before age 59 1/2 D. Distributions are made prior to the age of 70 1/2

C. Distributions are made on a policy before age 59 1/2

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? A. Tax-sheltered account plan B. HR 10 plan C. Profit sharing plan D. 401(k) plan

C. Profit sharing plan

What is the primary purpose of a 401(k) plan? A. To receive dividends over a certain period B. Life insurance distribution C. Retirement D. Education funds

C. Retirement