Retirements_Combined

In 2020, a self-employed doctor contributes the maximum permitted amount to a Keogh plan. The doctor has a full time nurse earning $60,000 per year. The contribution to be made for the nurse is:

$15,000 If an employer contributes the maximum of $57,000 to a Keogh in 2020, then 25% of "after Keogh earnings" is used to compute the percentage to be contributed for employees. Thus, for the nurse, $60,000 of income x 25% = $15,000 contribution. Note that this contribution is an added benefit for the nurse and will be deductible to the doctor making it.

A parent that has 2 minor children is permitted to contribute:

$2,000 for each child annually into a Coverdell Education Savings Account

In 2020, a self-employed person earning $400,000 wishes to open a Keogh Plan. The maximum yearly contribution is:

$57,000 (The maximum contribution to a Keogh is effectively 20% of income (prior to taking the Keogh "deduction") or $57,000 in 2020, whichever is less. 20% of $400,000 = $80,000. However, only the $57,000 maximum can be contributed in 2020. (Note that this amount is adjusted each year for inflation.)

All of the following statements are true about variable annuities

-Must be registered SEC -Sold w/prospectus -are a participating unit investment trust form of investment company -Regulated under Investment Act of 1940 -NON-exempt

Distributions after age 59 ½ from non-tax qualified retirement plans are:

-partial tax free return of capital and partial taxable income -contributions are made after tax

Distributions from qualified retirement plans that are not rolled over into an IRA or other qualified plan are subject to:

20% withholding tax

Distributions from Roth IRAs are subject to a penalty if withdrawals are made within:

5 years of original contribution

The penalty for making an excess contribution to an Individual Retirement Account is:

6% of the excess contribution

Contributions to Keogh Plans must be made by:

August 15th tax filing date permitted under an automatic extension of the calendar year after which the contribution may be claimed on that person's tax return

ROTH IRAs

Contributions can continue after 72 & distributions are not require to start after age 72

ROTH IRAs

Contributions can continue after age 72 & distribution are not required to start after age 72 -Not tax deductible

IRA for an individual earning more than 75k in 2020

Contributions to an IRA are allowed & is covered by another plan, tax deductible contributions are not allowed

Distributions from an Individual Retirement Account must commence by age:

Distributions from an Individual Retirement Account must commence by April 1st of the year following that person reaching age 72.

A premature withdrawal can be made from an Individual Retirement Account without penalty for which of the following reasons? I Excess medical expenses II Disability III Higher education expenses IV Birth of first child expenses

I, II, and III

Which statement is TRUE about the use of index option strategies by managers of pension plans subject to ERISA requirements?

Index option trades are permitted only if such transactions conform with the objectives stated in the plan document

The purchaser of a variable annuity bears all of the following risks

Investment, legislative, & interest rate risk

Which annuity payout option usually results in the largest periodic payment?

Life Annuity

Variable annuity contracts contain which of the following guarantees?

Mortality & expense guarantee (If one dies later than expected, the company continues to pay the annuity. If expenses rise, the company absorbs them above a set percentage. However, no guarantee is given for the rate of return (investment guarantee or interest rate guarantee) - this is only given for a fixed annuity.)

Which statement is TRUE when comparing a Roth IRA to a Traditional IRA?

Roth IRAs are not available to high-earning individuals; Traditional IRAs are available to high-earning individuals

The type of retirement plan that gives the employer flexibility as to the amount contributed annually is a(n):

SEP IRA

Contributions to qualified retirement plans, other than IRAs, must be made by:

The date on which the tax return is filed with the Internal Revenue Service

variable annuity--separate account characteristics

The separate account is legally segregated from the insurance company's general account & invests in shares of a designated mutual fund

Any changes in value of a variable annuity accumulation unit are directly related to changes in the:

Value of the securities funding the separate account

Under ERISA provisions, a pension fund manager that wishes to write naked call options:

can only do so if explicitly allowed in the plan document

Generally, if a non-spouse inherits an IRA, the beneficiary must:

elect to receive the entire proceeds over the next 10 years

Payments received by the owner of a non-tax qualified variable annuity are:

only taxable to the extent of earnings above the holder's cost basis

Your customer, age 68, who has an IRA account at your firm valued at $500,000, passes away. The customer leaves the account to his wife, age 55. She has no need for current income as she is still working, and wishes to know her best option to minimize taxes. She expects to retire at age 72, at which time, she will need the funds to pay for annual living expenses. You should advise the spouse to:

roll the funds into a new IRA in the spouse's name

Defined benefits plan

the annual benefit amount is fixed @ retirement & adoption of this type of plan benefits key employees who are nearing retirement

For a qualified retirement plan contribution to be deductible from that year's tax return, the contribution must be made by no later than:

the tax filing date of the following year