XCEL Retirement Plans
All of the following statements about traditional individual retirement accounts are false EXCEPT:
10% penalty is applied to withdrawals before age 59 1/2
What is the maximum number of employees (earning at least $5,000) that an employer 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 excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?
50%
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?
59 1/2
How long does an individual have to "rollover" funds from an IRA or qualified plan?
60 days
Traditional individual retirement annuity (IRA) distributions must start by:
April 1st of the year following the year the participant attains age 70 1/2
Which plan is intended to be used by a sole proprietor and the employees of that business?
Keogh Plan
A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called an:
profit-sharing 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
Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?
the employee
An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?
$2,500
Premature IRA distributions are assessed a penalty tax of:
10%
How are Roth IRA distributions normally taxed?
Distributions are received tax-free
Which of these retirement plans can be started by an employee, even if another plan is in existence?
Individual Retirement Account (IRA)
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
annuity
Post-tax dollar contributions are found in:
Roth IRA investments
A qualified profit-sharing plan is designed to:
allow employees to participate in the profits of the company
An employer that offers a qualified retirement plan to its employees is eligible to:
make tax-deductible contributions to the plan
In a qualified retirement plan, the yearly contributions to an employee's account:
are restricted to maximum levels set by the IRS
What type of employee welfare plans are not subject to ERISA regulations?
church plans
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
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?
if Tom's employment is terminated, 20% of the funds would be forfeited
At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in
income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan
A 55 year old recently received a $30,000 distribution from a previous employer's 401(k) plan, minus $6,000 withholding. Which federal taxes apply if non of the funds were rolled over?
income taxes plus a 10% penalty tax on $30,000
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
Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the:
marital deduction
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 funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?
none
In an individual retirement account (IRA), rollover contributions are:
not limited by dollar amount
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