Chapter 9 Exam Retirement Plans

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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

How are Roth IRA distributions normally taxed?

Distributions are received tax-free

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

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 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

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

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

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

A qualified profit-sharing plan is designed to

allow employees to participate in the profits of the company


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