CH 25 - Distributions from Retirement Plans

Question 1

What are the distribution options for qualified plans?

Answer 1

• Allow participants to choose from options and timing unless involuntary cash out ($5,000)
• Participants can choose to defer til their normal retirement date
• In-service withdrawals from profit-sharing plans

Question 2

What is the annuity option for IRA distributions?

Answer 2

variable annuity (fluctuating benefit payments)

Question 3

What are the THREE key issues for the middle-class client who is concerned about financing retirement?

Answer 3

1. choice of distribution option
2. rollover when change job
3. timing of retirement

Question 4

A wealthier client will generally elect ______ for control.

Answer 4

lump-sum rollover

Question 5

Why would a wealthier client purchase ILIT?

Answer 5

So that the distributions from the pension at death don’t pay estate taxes.

Question 6

Why would a wealthier client consider a Roth conversion? (2)

Answer 6

• Because is are no RMDs to a participant or spousal
• You can leave more by converting to a Roth because assets grow tax free

Question 7

Because IRA participates could be BOTH owner and beneficiary, withdrawal or distribution options are very ___________.

Answer 7

flexible