Chapter exam-retirement plans
Premature IRA distributions are assessed a penalty tax of
10%
All of the following statements about traditional individual retirement accounts are false EXCEPT
10% penalty is applied to withdrawals before age 59 1/2
An individual working part-time has an annual income of 25,000$. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?
2,500$
How long does an individual have to "rollover" funds from An IRA or qualified plan?
60 days
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 these retirement plans can be started by an employee, even if another plan is in existence?
Individual Retirement Account (IRA)
A sole proprietor may use this plan only if the employees of this business are included
Keogh Pension Plan
Which of the following is true about a qualified retirement that is "top heavy"?
More than 60% of the plans assets are in key employee accounts
Post-tax dollar contributions are found in
Roth IRA investments
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
annuity
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
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%
What type of employee welfare plans are not subject to ERISA regulations?
Church plans
At this age of 45, an individual withdrawals $50,000$ 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Income tax and a 10% penalty assessed upon funds withdrawn from the qualified plan