Qualified plans
Under the 401(k) bonus or thrift plan, the employer will contribute AAll of the money to the plan. B30% of what the employee contributes. C75% of what the employee contributes. DAn undetermined percentage for each dollar contributed by the employee.
An undetermined percentage for each dollar contributed by the employee.
SIMPLE Plans require all of the following EXCEPT AEmployees must receive a minimum of $5,000 in annual compensation. BAt least 1,000 employees. CNo other qualified plan can be used. DNo more than 100 employees.
At least 1,000 employees.
A tax-sheltered annuity is a special tax-favored retirement plan available to AAnyone. BCertain age groups only. CCertain groups depending on factors such as race, gender, and age. DCertain groups of employees only.
Certain groups of employees only.
All of the following apply to defined benefit plans EXCEPT AThey are qualified plans and cannot discriminate. BContributions are tied to the company profits. CBenefits are based on a specified formula that incorporates years of service, salary and age of retirement. DThe employer is responsible for providing promised retirement benefits.
Contributions are tied to the company profits.
For a retirement plan to be qualified, it must be designed for the benefit of AEmployer. BIRS. CEmployees. DKey employee.
Employees.
A 35-year-old spouse of the insured collects early distributions from her husband's retirement plan as a result of a divorce settlement. What penalties, if any, will she have to pay? ANo penalties B10% penalty tax C15% penalty tax DAge-based penalty stipulated in the contract
No penalties
Which of the following applicants would NOT qualify for a Keogh Plan? ASomeone who works for a self-employed individual BSomeone who works 400 hours per year CSomeone who has been employed for more than 12 months DSomeone who is over 25 years of age
Someone who works 400 hours per year
The advantage of qualified plans to employers is ATaxable contributions. BTax-deductible contributions. CTax-free earnings. DNo lump-sum payments.
Tax-deductible contributions.
All of the following would be different between qualified and nonqualified retirement plans EXCEPT ATaxation of withdrawals BTaxation of contributions CIRS approval requirements DTaxation on accumulation
Taxation on accumulation
Which of the following characteristics applies to defined benefit plans but not defined contribution plans? AThey are subject to the rules of ERISA. BThe amount of contributions made by the employer is determined by an actuarial formula. CThey are qualified plans. DEmployers can choose not to make contributions for a particular year.
The amount of contributions made by the employer is determined by an actuarial formula.
In a defined contribution plan, AThe contribution and the benefit are unknown. BThe contribution and the benefit are known. CThe contribution is known and the benefit is unknown. DThe benefit is known and the contribution is unknown.
The contribution is known and the benefit is unknown
Which of the following describes the tax advantage of a qualified retirement plan? AEmployer contributions are not taxed when paid out to the employee. BThe earnings in the plan accumulate tax deferred. CDistributions prior to age 59½ are tax deductible. DEmployer contributions are deductible as a business expense when the employee receives benefits.
The earnings in the plan accumulate tax deferred.
All of the following are general requirements of a qualified plan EXCEPT AThe plan must be permanent, written and legally binding. BThe plan must provide an offset for social security benefits. CThe plan must be communicated to all employees. DThe plan must be for the exclusive benefits of the employees and their beneficiaries.
The plan must provide an offset for social security benefits.
How are contributions to a tax-sheltered annuity treated with regards to taxation? AThey are taxed as income for the employee, but are tax free upon withdrawal. BThey are not included as income for the employee, but are taxable upon distribution. CThey are never taxed. DThey are taxed as income for the employee.
They are not included as income for the employee, but are taxable upon distribution.
