Qualified Plans

Question 2 of 15 An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n) ASEP. B403(b) Plan (TSA). CKeogh Plan. DRoth IRA.

B403(b) Plan (TSA). Under a 403(b) Plan, tax-sheltered annuities may be established for the employees of specified nonprofit charitable, educational, religious and other 501c(3) organizations, including teachers in public schools systems. Such plans generally are not available to other kinds of employees.

Question 4 of 15 For a retirement plan to be qualified, it must be designed for the benefit of AKey employee. BEmployer. CIRS. DEmployees.

Employees. Qualified plans are designed for the exclusive benefit of the employees and their beneficiaries.

Question 1 of 15 All of the following would be different between qualified and nonqualified retirement plans EXCEPT ATaxation of withdrawals BTaxation of contributions CIRS approval requirements DTaxation on accumulation

Taxation on accumulation Taxation on accumulation is deferred in both types of plans. The rest of the characteristics would differ.

Question 5 of 15 All of the following are general requirements of a qualified plan EXCEPT AThe plan must be permanent, written and legally binding. BThe plan must provide an offset for social security benefits. CThe plan must be communicated to all employees. DThe plan must be for the exclusive benefits of the employees and their beneficiaries.

The plan must provide an offset for social security benefits. Plans must meet the general requirements established by IRS.

Question 7 of 15 How are contributions to a tax-sheltered annuity treated with regards to taxation? AThey are never taxed. BThey are taxed as income for the employee. CThey are taxed as income for the employee, but are tax free upon withdrawal. DThey are not included as income for the employee, but are taxable upon distribution.

They are not included as income for the employee, but are taxable upon distribution. Funds contributed are excluded from the employee's current taxable income, but are taxable upon withdrawal.

Question 14 of 15 Which of the following is true about a defined benefit plan? AHigh-salaried employees with only a few years until retirement receive the highest contribution. BLow-salaried employees are excluded from the plan. CAll participating employees are vested immediately following a contribution to the plan. DContributions are made in regular fixed amounts.

High-salaried employees with only a few years until retirement receive the highest contribution. Defined benefit plans favor owners and key employees nearing retirement. The contribution formula is weighted toward these employees.

Question 12 of 15 Which of the following is NOT true regarding a nonqualified retirement plan? AEarnings grow tax deferred. BIt needs IRS approval. CContributions are not currently tax deductible. DIt can discriminate in benefits and selecting participants.

It needs IRS approval. Nonqualified retirement plans do not meet the IRS requirements for favorable tax treatment of deductions and contributions; therefore, they do not need to be approved by IRS.

Question 13 of 15 Which type of retirement account does not require the owner to start taking distributions at age 72? AStandard IRA BTraditional IRA CRoth IRA DNonqualified IRA

Roth IRA Roth contributions can continue regardless of the account owner's age, and in contrast with a traditional IRA, distributions do not have to begin at age 72.

uestion 9 of 15 All of the following would be different between qualified and nonqualified retirement plans EXCEPT ATaxation of withdrawals BTaxation of contributions CIRS approval requirements DTaxation on accumulation

Taxation on accumulation Taxation on accumulation is deferred in both types of plans. The rest of the characteristics would differ.

Question 2 of 15 Which of the following is NOT true regarding a nonqualified retirement plan? AEarnings grow tax deferred. BIt needs IRS approval. CContributions are not currently tax deductible. DIt can discriminate in benefits and selecting participants.

It needs IRS approval. Nonqualified retirement plans do not meet the IRS requirements for favorable tax treatment of deductions and contributions; therefore, they do not need to be approved by IRS.

Question 6 of 15 Which of the following is NOT true regarding a nonqualified retirement plan? AEarnings grow tax deferred. BIt needs IRS approval. CContributions are not currently tax deductible. DIt can discriminate in benefits and selecting participants.

It needs IRS approval. Nonqualified retirement plans do not meet the IRS requirements for favorable tax treatment of deductions and contributions; therefore, they do not need to be approved by IRS.

Question 8 of 15 Who may contribute to a Keogh (HR-10) plan? APartner with at least 5% ownership BSelf-employed plumber CManager of a store DCorporate executive

Self-employed plumber Self-employed persons may contribute to an HR-10 Plan.

Question 1 of 15 A tax-sheltered annuity is a special tax-favored retirement plan available to ACertain age groups only. BCertain groups depending on factors such as race, gender, and age. CCertain groups of employees only. DAnyone. Certain groups of employees only.

Certain groups of employees only. tax-sheltered annuity is a special tax-favored retirement plan available only to certain groups of employees (nonprofit charitable, educational, religious, and other 501c(3) organizations, including all employees in public education).

Question 7 of 15 All of the following would be eligible to establish a Keogh retirement plan EXCEPT AA sole proprietor of film development store with no employees. BA hair dresser who operates her business at her house. CThe president and employee of a family corporation. DA sole proprietor of a service station who employs four employees.

The president and employee of a family corporation. Keogh plans are for self-employed individuals and their employees.

Question 4 of 15 A 403(b) plan, commonly referred to as a TSA, is available to be used by AGovernment workers. BPostal employees. CSelf-employed persons. DTeachers and not-for-profit organizations.

Teachers and not-for-profit organizations. Tax sheltered annuities, commonly referred to as 403 (b) plans are designed for teachers and not-for-profit organizations. Review Content Next Question Id: [E1057528]

Question 2 of 15 If a company has a Simplified Employee Pension plan, what type of plan is it? AAn undefined contribution plan for large businesses BA qualified plan for a small business CThe same as a 401(k) plan DThe same as an IRA, with the same contribution limits

A qualified plan for a small business A Simplified Employee Pension (SEP) is a type of qualified plan suited for the small employer or for self-employed. A SEP is an employer-sponsored IRA with an expanded contribution rate up to 25% of compensation or a specified maximum contribution amount.

Question 9 of 15 If a retirement plan or annuity is "qualified," this means AIt has a penalty for early withdrawal. BIt accepts after-tax contributions. CIt is noncancellable. DIt is approved by the IRS.

It is approved by the IRS. A qualified retirement plan is approved by the IRS, which then gives both the employer and employee benefits such as deductible contributions and tax-deferred growth.

Question 6 of 15 Which of the following characteristics applies to defined benefit plans but not defined contribution plans? AThey are qualified plans. BEmployers can choose not to make contributions for a particular year. CThey are subject to the rules of ERISA. DThe amount of contributions made by the employer is determined by an actuarial formula.

The amount of contributions made by the employer is determined by an actuarial formula. Defined benefit plans offer benefits that are based on a definite contribution formula. Defined contribution plans may specify that contributions are made based on corporate profits, so contributions may not be made when that corporation is not profitable. Both are qualified plans subject to the rules of ERISA.

SIMPLE Plans require all of the following EXCEPT ANo other qualified plan can be used. BNo more than 100 employees. CEmployees must receive a minimum of $5,000 in annual compensation. DAt least 1,000 employees.

At least 1,000 employees. A SIMPLE plan is available to small businesses that employ not more than 100 employees receiving at least $5,000 in compensation from the employer during the previous year.

Question 3 of 15 Employer contributions made to a qualified plan AAre taxed annually as salary. BAre subject to vesting requirements. CMay discriminate in favor of highly paid employees. DAre after-tax contributions.

Are subject to vesting requirements. Qualified plans must have a vesting requirement.

uestion 10 of 15 An IRA purchased by a small employer to cover employees is known as a ADefined contribution plan. B403(b) plan. CSimplified Employee Pension plan. D401(k) plan.

Simplified Employee Pension plan. A Simplified Employee Pension (SEP) is an employer sponsored IRA. Contributions to the plan are not included in the employee's taxable income for the year, to the extent that they do not exceed the maximums allowed. Distributions from a SEP are taxable as ordinary income when received at retirement.

Question 11 of 15 Under the 401(k) bonus or thrift plan, the employer will contribute AAn undetermined percentage for each dollar contributed by the employee. BAll of the money to the plan. C30% of what the employee contributes. D75% of what the employee contributes.

An undetermined percentage for each dollar contributed by the employee. Under the bonus or thrift plan, the employer will contribute certain amount or percentage for each dollar contributed by the employee. There is no specific rule as to how much the employer must contribute.

Question 5 of 15 All of the following statements are true regarding tax-qualified annuities EXCEPT AAnnuity earnings are tax deferred. BThey must be approved by the IRS. CWithdrawals are taxed. DEmployer contributions are not tax deductible.

Employer contributions are not tax deductible. Tax-qualified annuities must be approved by the IRS and allow for tax deductible employer contributions. All withdrawals are taxed and earnings grow tax deferred.

Question 10 of 15 Which of the following characteristics applies to defined benefit plans but not defined contribution plans? AThey are qualified plans. BEmployers can choose not to make contributions for a particular year. CThey are subject to the rules of ERISA. DThe amount of contributions made by the employer is determined by an actuarial formula.

The amount of contributions made by the employer is determined by an actuarial formula. Defined benefit plans offer benefits that are based on a definite contribution formula. Defined contribution plans may specify that contributions are made based on corporate profits, so contributions may not be made when that corporation is not profitable. Both are qualified plans subject to the rules of ERISA.

Question 1 of 15 Which of the following is TRUE of a qualified plan? AIt may discriminate in favor of highly paid employees. BIt may allow unlimited contributions. CIt has a tax benefit for both employer and employee. DIt does not need to have a vesting schedule.

It has a tax benefit for both employer and employee. A qualified plan is approved by the IRS, which then gives both the employer and employee benefits in deductibility of contributions and tax deferral of growth.

Question 3 of 15 Which of the following applicants would NOT qualify for a Keogh Plan? ASomeone who works 400 hours per year BSomeone who has been employed for more than 12 months CSomeone who is over 25 years of age DSomeone who works for a self-employed individual

Someone who works 400 hours per year A person must have worked at least 1,000 hours per year to be eligible for a Keogh Plan.

Question 15 of 15 What is the primary purpose of a 401(k) plan? AEducation funds BTo receive dividends over a certain period CLife insurance distribution DRetirement

Retirement Profit-sharing plans are qualified plans where a portion of the company's profit is contributed to the plan and shared with employees. A 401(k) qualified retirement plan allows employees to take a reduction in their current salaries by deferring amounts into a retirement plan. The company can also somehow match the employee's contribution, whether it is dollar for dollar or on a percentage basis.