Section 24
On traditional 401k plans, Employer contributions may not exceed
25% of total payroll.
529 plans allow large contributions as high as
250,000 and above
Hardship withdrawals are only permitted in
401K plans, not IRA's
It is not permitted to have a 401 k and a
403 b at the same time.
tax exempt organizations are listed under internal revenue code
501 cee 3
Substantially equal periodic payment exception under the I.R.S. rule
72 tee
An individual covered under a traditional IRA would NOT be able to also maintain which of the following?
A 401K and 403B
Distributions from which of the following can be rolled over into an IRA?
Another IRA, Corporate pension plan, Corporate profit-sharing plan, and a Keogh plan
When it comes to qualified plans, you can postpone beginning distributions until
April 1st of the calendar year following retirement
Which of the following employer-sponsored plans is NOT covered by ERISA?
Deferred compensation
There are no tax benefits in an
an UTMA account
The economic growth and tax relief reconciliation act of 2001 is responsible for
catch up contributions
IRA's, 401 kays and 403 bees all allow for
catch up contributions over 50 years of age
The Coverdell may only be used by persons who fall within
certain income limits—while 529 plan have no such limits
Employer contributions to 401 kays and defined benefit plans are
deductible to the employer
Deferred compensation plans are not qualified plans and may be
discriminatory.
Funds that are not used for qualified education expenses may be withdrawn, but the earnings are subject to
income tax plus a 10% tax penalty.
457 plans are available to government entities and some tax-exempt organizations
they do not follow erisa rules, they can be discriminatory
Under the Internal Revenue Code, the income distributed from a non-contributory pension plan is taxed
to the retiree slash plan participant as ordinary income
The income and capital gains earned in the account are tax deferred until the funds are withdrawn in a
traditional IRA
The Coverdell ESA has a maximum annual limit is
$2,000 and offers tax-free growth, it is most suitable for lower income families
If funds remain unused in the Coverdell ESA, they must be distributed to the named beneficiary on the account by
30 days after the child's 30th birthday
Excess contributions to an IRA are subject to
6% penalty on the amount that exceeds if the excess is not removed by the time the taxpayer files a tax return, but no later than april 15th
settlor functions of an erisa plan include
Determining the age at which benefits are to be provided, Changing the level of employer contributions, and Amending the plan
ineligible investments for an IRA include
Gems, intangibles, and works of art
Life insurance may not be used to fund an
I.R.A.
Withdrawals during retirement from which of the following accounts would most likely be subject to the greatest amount of taxation?
Qualified variable annuity
The requirement for a retirement plan trustee to follow fiduciary standards is found in
Section 404 (c) of ERISA.
On a traditional IRA
The income and capital gains earned in the account are tax deferred until the funds are withdrawn.
Which of the following statements regarding a traditional IRA is TRUE?
The income and capital gains earned in the account are tax deferred until the funds are withdrawn.
Which of the following is NOT an example of a non-qualified retirement plan?
a SIMPLE plan
Voluntary employee contributions are optional in a
money purchase pension plan
Under ERISA, which of the following activities may a fiduciary employ for a corporate retirement plan?
mploy third-party pension consultants to advise the plan on the purchase of complex financial instruments.
Section 529 plans are also known as
municipal fund securities or q.t.p.
A common benefit for a business to provide a deferred compensation plan is to
retain key employees, because they can discriminate
In a defined benefit plan, the retiree receives a specified amount such as
retirement income equaling a percentage of the average of his last 5 years of compensation. This means that the sponsor is taking the risk.
Both traditional IRAs and Roth 401(k) plans have
R.M.D's at age 70½.
donor maintains control over the funds in
Section 529 plan
A person providing which of the following services to an ERISA plan would be performing in a fiduciary capacity?
Selecting and monitoring third-party service providers
Section 404(c) of ERISA deals with
fiduciary responsibilities
a keogh plan is similar to an
sep IRA
Keogh plans allow for contributions
substantially larger than traditional I.R.A. limits
The 457 plan allows participants to
withdraw funds at any time, not just after age 59½, without incurring the 10% tax penalty. Income taxes would, of course, be due, but no penalty.
The following plans must meet set standards for vesting, eligibility, and funding under ERISA.
Keogh, profit-sharing, and corporate pension plans
The Employment Retirement Income Security Act of 1974 (ERISA) is
a federal law regulating many aspects of private retirement plans
457 plans are deferred
compensation plans
IRAs and Keogh plans are similar in the following ways
deferral of taxes, there is a 50% tax penalty for insufficient distributions, and distributions without penalty can begin as early as age 59½
In a 401(k) plan, a plan sponsor can shift investment risk to the
employee by complying with ERISA Section 404(c) rules.
if an erisa plan offers a broad index fund, a medium-term government bond fund, and a cash-equivalent fund they are reducing
fiduciary exposure
The entire amount of the distribution from a qualified annuity
is subject to ordinary income tax
Keogh plans must have eligibility requirements that cover all employees who are
full- time, are at least 21 years of age, and have 1 or more years of service.
You may transfer unused funds in a coverdell E.S.A to Related parties under 30 years old, which would include
immediate family members of the original beneficiary, parents, cousins, aunts and uncles, and even in-laws.
One may have both a Roth IRA and a Roth 401(k) contributing
the maximum to each one.
A money purchase pension plan is a defined contribution plan established by
the employer, thereby making the employer contributions mandatory.
the latest date that an IRA participant may make an IRA deposit for the current year is April 15 of the following year or
the first business day following if the 15th is a Saturday or Sunday
The difference between a 457 for a government entity and a 457 for a tax exempt organization is that
a government plan must hold its assets in trust or custodial accounts for the participants
A basic difference between a Section 457 plan established on behalf of a governmental entity and one established by a private tax-exempt organization is that
a governmental plan must hold its assets in trust or custodial accounts for the benefit of individual participants
When the distribution is paid in equal annual amounts over the owner's life
a premature distribution from a traditional IRA will be exempt from the premature distribution penalty
basis for a deposit into an defined contribution Keogh HR-10 account is equal to
all earned income for the year
To comply with the safe harbor requirements of Section 404(c) of ERISA, the trustee of a 401(k) plan must
allow plan participants to exercise control over their investments and provide plan participants with information relating to the risks and performance of each investment alternative offered
if a plan administrator prepared a written investment policy statement meeting erisa requirements, you would expect to find all of the following
investment philosophy, performance measurement parameters, and methods to be used for determining how the plan will meet future cash flow needs
When a corporation establishes a qualified money purchase plan, the corporation is obligated to
make annual contributions at the rate stated in the plan
To comply with the safe harbor requirements of Section 404(c) of ERISA
minimum of 3 different investment alternatives and allow plan participants to change their investment options quarterly
Those individuals who are considered parties in interest due to handling the assets of a corporate retirement plans are
not permitted to use those funds to acquire company assets in an amount beyond the allowable limits
a beneficiary of an ESA who withdraws the funds for nonqualified expenses will be taxed on
only earnings since the contributions were made with after-tax dollars. as well as a 10% penalty
If an beneficiary of a BDA is in a high tax bracket his best option is to
open a separate inherited IRA in martha's name for the benefit of the beneficiary
IRA contribution limits are the total for all accounts including
roth and traditional. For example, a person over 50 can contribute up to 7 thousand total, over all accounts.
403 Bees are for tex exempt organizations and are referred to as
tax sheltered annuities because only annuities were allowed up until 1974. Now mutual funds are also allowed.
An investment policy statement prepared for clients describes
the allocation percentages for each asset class and the expected returns from each class, and outlines strategies that may be used for timing the market and choosing specific investments within each class