Chapter 8 - Qualified Retirement Plans

Question 1

Qualified Plans

Answer 1

Tax advantage retirement savings plan

Principal as well as growth is tax deferred

Nonqualified withdrawals prior to age 59.5 will be penalized 10%

Taxes must be paid as withdrawn

Withdrawals must begin the year after you turn 72

Question 2

401k

Answer 2

Deferred compensation or CODA (Cash or Deferred Arrangement)

Typically includes a match from the employer

Question 3

403b

Answer 3

Deferred compensation or CODA

Established for the non-profit

Question 4

Simple

Answer 4

Designed for small employers (100 or less)

Uses individual Retirement accounts

CODA or deferred compensation plan

Qualified retirement plan

Question 5

Keogh (HR-10)

Answer 5

Made for the self employed

Fully funded by the employer

Question 6

Simplified Employee Pension Plan (SEP)

Answer 6

Made for the self employed

Fully funded by the employer

Designed for the small business owner (100 or less)

Uses individual retirement accounts

100% vested

Question 7

Individual Retirement Accounts (IRA)

Answer 7

Traditional IRA

Created as a place to park transferred retirement funds

Can be used as an individual retirement plan

Question 8

Roth IRA

Answer 8

Contributions are not deductible and do not receive any tax breaks

The account grows income tax free