Distributions and Rollovers Flashcards
Which of the following distributions of elective deferrals in a 403(b) plan is NOT permitted prior to a participant attaining age 59 1/2?
a. distributions to an alternate payee pursuant to a QDRO
b. distribution to rent a vacation home
c. corrective distributions as permitted by the IRC
d. distributions on plan termination
Distribution to rent a vacation home
Distributions of elective deferrals cannot be made to rent a vacation home if the participant is not 59 1/2. After age 59 1/2, a plan could but is not required to permit a distribution of elective deferrals for any reason
Which of the following events cannot be used to permit a participant to withdraw employer contributions from a 403(b) plan?
a. 100% vesting in employer contribution account
b. severance from service
c. attainment of age 59 1/2
d. death
100% vesting in employer contribution account
Becoming fully vested is not a distributable event
The pre 1989 account value derived from elective contributions to a 403(b) (1) annuity contract is not subject to IRC withdrawal restrictions?
True
False
True
403(b) annuity contracts may offer additional flexibility for withdrawals than 403(b) custodial accounts depending on when the annuity contract was issued. There are no restrictions on the pre-1989 account value derived from elective contributions to a 403 (b) (1) annuity contract nor to the account derived from employer contributions to a 403(b) (1) annuity contract issued before January 1, 2009. Note than an insurance company may include additional withdrawals restrictions on its contracts
Dianne has recently started employment with a new company and wants to roll over her balance which is entirely pre-tax, from her prior employer’s 403(b) plan into her new employer’s 403(b) plan. Which of the following statements about Dianne’s rollover is TRUE?
a. By law, all plans must allow rollovers to and from 403(b) plans
b. if Dianne has received a taxable distribution of her account, then she cannot rollover any amount into the new plan.
c. If Dianne’s new plan permits rollovers into the plan, then she can roll over the entire balance
d. If Dianne’s prior plan allowed for rollovers then the new plan must allow the amount to be rolled over into the new plan
If Dianne’s new plan permits rollovers into the plan, then she can rollover the entire balance
A 403(b) plan is never required to accept rollover contributions
Which of the following statements regarding involuntary cash-outs requirements from 403(b) plans is TRUE?
a. Plans are only permitted to cash-out accounts if the terminated participant has at least five 1-year breaks in service
b. The plan administrator must rollover any distribution that is greater than $1,00 and no more than $5,000 directly into a Roth IRA
c. Plans may not cash-out individuals who are fully vested in their account balances
d. The DOL has established safe harbor procedure to reduce the fiduciary liability that might otherwise result from selecting the IRA into which it can be rolled over
The DOL has established safe harbor procedures otherwise resulting from selecting the IRA into which it can be rolled over
The DOL issued safe harbor rules that a plan can use when rolling a participants funds into an IRA. This reduces the possible liability of plan fiduciaries for the selection of the IRA provider
Which of the following describes the taxation of Roth contributions in a 403(b) plan?
a. the contributions are taxable in the year contributed and the earnings are taxable as they are earned
b. the earnings are taxable each year as they are earned.
c. the contributions are deductible in the year contributed and taxed in the year distributed
d. the contributions are taxable in the year contributed and the earnings may be tax free when distributed if certain requirements are met
The contributions are taxable in the year contributed and the earnings may be tax free when distributed if certain requirements are met
Roth contributions ( and conversions) result in current year taxation. The Roth contributions are not taxed when withdrawn, and if there is a qualifying distribution, the earnings on the Roth contributions may also be withdrawn tax-free
What is the maximum amount of 403(b) distributions a retired public safety officer can transfer tax free each yearto pay for retiree medical insurance?
a. 2,500
b. 3,000
c. 4,000
d. 5000
3,000
The maximum amount that can be transferred is 3,000 per year
Based on the following information, determine latest date to take first RMD-
* born February 2, 1946
* date of hire September 15, 1998
* retirement date March 20, 2021
a. April 1, 2021
b. December 31,2021
c. April 1, 2022
d. December 31,2022
April 1, 2022
Required beginning date is April 1 following the year whichever is later age 70 1/2 (72 if after 2019) or retirement. The retirement date is the latter of the 2 dates March 20, 2021
Lloyd is a participant in a 403(b) plan and he dies in January 2021 at age 70. His spouse Amanda is 60 when he dies. In order to satisfy IRC 401(a)(9) which of the following statements are true?
a. The plan may permit the death benefit paid to Amanda over her life expectancy
b. The plan must distribute the entire death benefit to Amanda within 10 years of Lloyds death
c. The plan must distribute the death benefit to Amanda over Lloyd’s life expectancy, assuming he has not died
d. The plan must distribute the entire death benefit to Amanda within 5 years of Lloyd’s death
The plan may permit the death benefit paid to Amanda over her life expectancy
The SECURE Act still permits distributions to be made over a beneficiary’s life expectancy when the beneficiary is the participants spouse ( minor children or disabled dependents)
For other beneficiaries the SECURE Act requires payment of the death benefit within 10 years following participant’s death
A Roth IRA can be rolled into a Roth 403 (b)
True
False
False
Roth 403(b) Roth 401(k) and Roth governmental 457 (b) accounts can be rolled into one another or to a Roth IRA
A Roth IRA cannot be rolled INTO a Roth 403(b), Roth 457(b) or Roth 401(k) account
IRS Form 1099-R includes information regarding the applicability of the 10% additional tax for early distributions
True
False
True
1099-R reports distributions from 403(b) plans.Codes are used to indicate if 10% additional tax for early distributions. The form does not determine if the penalty applies. If the ph rolls over the distribution then the tax would not apply
Refunds of excess deferrals made to a 403 (b) plan are subject to the 10% premature distribution penalty tax
True
False
False
The refunds of excess deferrals made to a 403(b) plan are one of the exceptions to the 10% premature distribution penalty tax under 73(t)
