CH 17 - Individual Retirement Arrangements Flashcards
What is the maximum contribution limit for IRAs and Roth IRAs combined?
lesser of $5,500 or 100% of ALL aggregate earnings
What is the maximum “catch-up” for 50-year-olds with IRAs and Roth IRAs?
$1K
Explain the exemption for the $5,500 spousal IRA limit.
Contributions allowed for nonworking spouse if they are married filing jointly and joint income equals at least the IRA contribution.
How and when must IRA contributions be made?
Must be in cash by April 15th
What happens to any excess IRA contributions over the required limit?
They are subject to a 6% penalty each tax year unless you take out the extra, plus interest before April 15th.
What is an IRA re-characterization?
It treats contributions made to one type of IRA as if it were made to another type of IRA.
One must be under age __________ and have compensation from __________ to be eligible to make non-deductible IRA contributions.
- 70 ½
- employment
When the right conditions are meet (under 70 ½ and employment income), one can always make nondeductible IRA contributions if…
not an active participant; including spouses.
What are the tax filing status and income for ACTIVE participants of a deductible IRA?
A). single - ___________
B). married - ___________
C). spouse acitve - ___________
single = $62K to $72K
married = $99K to $119K
spouse active = $186K to $196K
What is the “active-participant” status for the following plans?
A). tax-advantaged plan
B). defined-contribution
C). defines-benefit
tax-advantaged plan = any tax-advantaged plan (not non-qualified)
BC = active unless excluded from plan’s eligibility provisions
DC = must receive allocation of contribution (including salary deferrals) or forfeiture
What are the tax filing status and income for active participants of a Roth IRA?
single - ___________
married - ___________
single = $118K to $133K
married = $186K to $196K
When can a Roth IRA conversion cause a 72(t) penalty of 10% after a withdrawal?
If the withdrawal is done within first 5 years of the conversion.
The taxable portion of a Roth IRA conversion is treated as…
taxable income
What is the participation status of an individual who makes salary deferrals to a 2015 calendar year 401(k) plan in the month of January 2015, then terminates employment? Is the individual an active participant for 2015?
Yes. The salary deferrals count as employer contributions and participating for any part of the year counts for active participant status.
What is the participation status of an individual who first participates on July 1, 2015, in a plan with a July 1, 2015 to June 30, 2016 plan year? Is the individual an active participant for 2015?
NO. Active participant for the calendar year in which the plan year ends.
