Ch 7 Flashcards
Who funds the benefits under Social Security and the Railroad Retirement Act?
Employees and employers
How are distributions from a traditional IRA taxed?
Fully taxed.
How did the stock market crash in 1929 contribute to the growth of private pensions?
Corporations received enhanced tax breaks for contributing to them.
What percentage of a pension plan can be invested in company stock?
10
Some 401K plans let employees allocate elective deferrals to a Roth 401K. What is the income tax treatment?
Deferrals are included in income and qualified distributions are entirely tax free.
What is the age limit for contributing to a traditional IRA?
70 1/2
Are there required distributions under a Roth?
No
Who can get SS Survivor benefits?
If currently insured (or fully):
- Dependent, unmarried children
- Spouse or ex-spouse caring for children
Only if fully insured:
- Spouse age 60 or over
- Dependent parent age 62 or older
If someone’s full SS retirement age is 66 and they wait for years to retire, what is the benefit?
32% more benefit, permanently (8%/yr)
What if someone whose full retirement age is 66 retires at 62?
5/9% 36 months = 20
5/12% 12 months = 5
25% penalty!
Are defined benefit plans expensive to administer?
No. The administration, reporting, and disclosure agreements are minimal and inexpensive
This type of defined benefit plan has a benefit that is more like a defined contribution plan.
Cash balance plan.
This type of plan closely resembles an IRA.
SEP
How long is the waiting period for SS Disability benefits?
5 months
