chapter 9 retirement plans

Question 1

is a retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out. Taxes are not paid until the money is withdrawn from the account.

Answer 1

401K

Question 2

is a retirement plan for certain employees of public schools, employees of specific tax-exempt organizations, and certain ministers.

Answer 2

403 B

Question 3

are pension plans under which a specific benefit formula determines benefits.

Answer 3

defined benefit plans

Question 4

plans are a tax-qualified retirement plan in which annual contributions are determined by a formula set forth in the plan. Benefits paid to a participant vary with the amount of contributions made on the participant’s behalf and the length of service under the plan.

Answer 4

Defined contribution plans

Question 5

federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.

Answer 5

Employee retirement income security act of 1974

Question 6

re designed to fund the retirement of self-employed individuals. The name is derived from the Keogh Act (HR-10) author, under which contributions to such plans are given favorable tax treatment.

Answer 6

Keogh Plans

Question 7

if a withdrawal is taken without meeting the above criteria and the amount of the withdrawal exceeds the total amount contributed, it is a nonqualified withdrawal. The earnings from the contributions become taxable.

Answer 7

nonqualified withdrawal

Question 8

plans are any plans whereby a portion of a company’s profits is set aside for distribution to employees who qualify under the plan.

Answer 8

profit sharing plans

Question 9

is a retirement or employee compensation plan established and maintained by an employer that meets specific guidelines spelled out by the IRS and consequently receives favorable tax treatment.

Answer 9

qualified plan

Question 10

provide the tax-free distribution of earnings from a Roth IRA. To be a qualified withdrawal, the funds must have been held in the account for a minimum of five years; and if the withdrawal occurs for one of the following reasons, no portion of the withdrawal is subject to tax; permanent disability; made by a beneficiary after the owner’s death; or used to buy, build or rebuild your first home ( $10,000 maximum ).

Answer 10

qualified withdrawl

Question 11

are an individual retirement account established with funds transferred from another IRA or qualified retirement plan that the owner had terminated.

Answer 11

rollovers

Question 12

is an individual retirement account allowing a person to set aside after-tax income up to a specified amount each year. Both earnings on the account and withdrawals after age 59 1/2 are tax-free.

Answer 12

ROTH IRA

Question 13

) is a qualified employer retirement plan that allows small employers to set up tax-favored retirement savings plans for their employees.

Answer 13

Saving incentive match for employees

Question 14

is a type of qualified retirement plan under which the employer contributes to an individual retirement account set up and maintained by the employee.

Answer 14

Simplified Employee pension

Question 15

is an individual qualified retirement account through which eligible individuals accumulate tax-deferred income up to a certain amount each year, depending on the person’s tax bracket.

Answer 15

Traditional IRA

Question 16

the purpose of ERISA is to protect the rights of workers covered under an employer-sponsored plan.

Answer 16

Employee Retirement Income Security Act of 1974

Question 17

cannot discriminate in favor of highly-paid employees in its coverage provisions or in its contributions and benefits provisions.

Answer 17

qualified plan