Chapter 10: Retirement Plans Flashcards
An employee request that the balance of her 401k account be sent to her in one lump sum. Up receipt of the distribution she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?
distribution is subject to federal income tax withholding
A 55 year old recently received a $30,000 distribution from a previous employer’s 401k plan, minus $6,000 withholding. Which federal taxes apply if non of the funds were rolled over?
income taxes plus a 10% penalty tax on $30,000
Premature IRA distributions are assessed a penalty of
10%
At the age of 45, an individual withdraws $50,000 from his qualified profit sharing plan and then deposits this amount into a personal savings account. This action would result in
income tax and a 10% penalty assessed upon funds withdrawn from the qualified plan
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid
mandatory income tax withholding on the transfer amount
How are Roth IRA distributions normally taxed?
Distributions are received tax free
Who is normally considered to be the owner of a 403b tax sheltered annuity?
the employee
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
ordinary income tax and a 10% tax penalty for early withdrawal
Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?
the account can be rolled into the surviving spouse’s IRA
A retirement plan that sets aside part of the company’s net income for distributions to qualified employees is called a:
profit sharing plan
Post tax dollar contributions are found in
roth IRA investments
Traditional individual retirement annuity (IRA) distributions must start by
April 1st of the year following the year the participant attains the age 70 1/2
When funds are shifted from one IRA to another IRA, what percentage of the tax is withheld?
none
An employer that offers a qualified retirement plan to its employees is eligible to
make tax deductible contributions to the plan
