Chapter 9 Retirement Plans exam
How long does an individual have to "rollover" funds from an IRA or qualified plan?
60 days
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
Annuity
Traditional individual retirement annuity (IRA) distributions must start by
April 1st of the year following the year the participant attains age 70 1/2
What type of employee welfare plans are not subject to ERISA regulations?
Church plans
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
A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a
Profit-sharing plan
What does a 401(k) plan generally provide its participants?
Salary-deferral contributions
Premature IRA distributions are assessed a penalty tax of
10%
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Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan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 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
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
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
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?
59 1/2
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?
$25,000
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