Individual Retirement Plans
Which of the following will happen if a traditional IRA owner dies before all of the tax-deducted funds in his or her account have been paid out?
The funds will be paid and taxed to the beneficiary.
All of the following are eligible to make contributions (tax-deductible or otherwise) to a traditional IRA EXCEPT:
Bud, age 68, whose income consists of his pension and Social Security benefits
Which of the following statements about Roth IRAs is correct?
Contributions to a Roth IRA are not deductible.
Which of the following statements correctly describes the taxation of a Roth IRA distribution to a person who is age 59' or older?
Distributions are generally tax free.
Which of the following statements about IRA rollovers is CORRECT?
Funds can be rolled over from one IRA to another or from a qualified retirement plan to an IRA.
With respect to owning a traditional IRA, which of the following statements is true if an individual is covered by an employer-sponsored qualified plan?
He or she can own and contribute to an IRA, but deductions may be limited for amounts contributed into it based on income.
Brian's required minimum distribution from his traditional IRA was $6,000 this year. However, he only took a $2,000 distribution. What tax penalty will Brian have to pay?
$2000
Lisa, age 35, takes a $9,000 distribution from her traditional IRA to use as a down payment on her first home. What penalty tax must Lisa pay?
0
Workers can make so-called 'catch up contributions' to an IRA beginning at age:
50
Premature withdrawals from an IRA are subject to additional tax penalties when taken before the owner is age:
59 1/2
Which of the following statements regarding the deduction of traditional IRA contributions is correct?
Anyone with earned income can own and contribute to an IRA, but for those who are covered under a qualified employer plan, contributions are deductible only if their modified adjusted gross income (MAGI) is below the current year's IRS limit.
All of the following statements regarding IRA rollovers are correct EXCEPT:
There is no limit on the number of times an IRA may be rolled over to another IRA in a 12-month period.
With respect to Roth IRA conversions, all the following statements are correct EXCEPT:
To convert to a Roth IRA, a person must have earned income.
Required minimum distributions (RMDs) are required with all the following types of qualified retirement plans EXCEPT:
a Roth IRA
Catch-up contributions may be made to an IRA by workers who are:
age 50 and older
All of the following are acceptable funding vehicles for a traditional IRA EXCEPT:
life insurance
If a person receives funds directly from a qualified pension plan and intends to roll them over to an IRA, within how many days must the rollover be completed?
60 days
If a person receives funds directly from a qualified pension plan and intends to roll them over to an IRA. Within how many days must the rollover be completed?
60 days
What is the maximum length of time a retirement plan participant has to complete a direct rollover transaction without being subject to taxation?
60 days
With a direct IRA rollover the IRA owner must deposit the rollover amount into a new IRA within how many days to avoid immediate taxation?
60 days
At the age of 56, Carmen opens a Roth IRA. What is the earliest age at which she can take a withdrawal of earnings from her account without being subject to tax or penalty?
61
In a trustee-to-trustee IRA rollover, what percentage of the rollover amount must the current trustee withhold for tax purposes?
0 percent
Which of the following individuals will be subject to the 10 percent premature distribution penalty tax?
Jayne, age 57, who took a withdrawal from her Roth IRA after having owned it for two years
Sean, age 67, has owned a Roth IRA for eight years. His account is now worth $50,000, and he withdrew $5,000 this year to take a vacation. What are the tax consequences?
Sean will not pay any tax on the withdrawal.
Which of the following individuals would NOT be able to establish and contribute to a traditional IRA?
David, age 60, who is not employed but volunteers with several local charities
Paul reached age 70' this year and has a Roth IRA worth $100,000. Which of the following statements best describes his distribution options?
Paul is not required to take any distributions from his Roth IRA at any age.
Jason, age 27, is single, works for a small computer company, and earns $150,000 a year. Because the company does not have any retirement plan for its employees, Jason set up and contributed to a traditional IRA this year. Which of the following statements is correct?
Jason can deduct the full amount that he contributes to his traditional IRA.
Jenna, age 40, works full time while her husband, Rick, age 42, currently does not work. Which of the following statements is correct?
Jenna can contribute the maximum contribution amount to a traditional IRA for both herself and for Rick.
Jim, age 45, is single and earned $50,000 this year. He owns both a Roth IRA and a traditional IRA. Which of the following statements is correct?
Jim can contribute to both his traditional IRA and Roth IRA , provided the total amount contributed does not exceed the overall contribution limit.
Jessica's traditional IRA is worth $300,000 and consists only of prior deductible contributions and earnings. What are the tax implications if Jessica converts her IRA to a Roth IRA?
She must pay income taxes on the entire $300,000.
Assuming all are under age 59 ', which of the following will be assessed a premature distribution penalty when making a withdrawal from her IRA?
Daisy, who needs money because she has been unemployed for two years
Dana has made $85,000 in deductible contributions to her traditional IRA which is now worth $125,000. What are the tax consequences if she takes a lump sum distribution of her entire IRA account?
Dana must pay income tax on the entire $125,000 distribution.
People can make catch-up contributions to a traditional IRA if they are:
age 50 and older
Federal law requires that minimum distributions be made from an IRA no later than April 1 of the year following the year the owner reaches:
age 70'
Michael, a 10-year employee with $50,000 in a 401(k) plan at Alpha Company, takes a job with Beta Company. What would a rollover IRA accomplish for Michael in this situation?
allow him to transfer the $50,000 without tax penalty
All of the following distributions from a traditional IRA prior to age 59' would be exempt from the 10 percent penalty tax, EXCEPT:
distributions taken when the IRA owner remarries
If a Roth IRA owner takes a withdrawal at age 50 to pay for a grandchild's education after having owned the account for three years, then:
the earnings portion of the withdrawal is subject to income tax and a 10 percent penalty tax
A married couple that files a joint tax return asks their agent about opening up a Roth IRA. What is the first piece of information the agent needs before she can advise them?
their joint income
James wants to convert his $150,000 traditional IRA to a Roth IRA. What best describes the tax treatment for the Roth conversion?
The converted funds are taxed, but Roth IRA earnings and distribution will be tax free.
When Bill left Beta Industries on March 1, he received a distribution of the entire account balance from his 401(k) plan. To avoid taxation of the entire amount, he must deposit the funds into a rollover IRA no later than:
April 30
