IRA Compliance Flashcards by Shantel Albert

Which IRC section explains the 10 percent early distribution penalty tax and the various exceptions to this penalty tax?
a. IRC Sec. 72(t)
b. IRC Sec. 219
c. IRC Sec 402
d. IRC Sec. 408

IRC Sec. 72(t)

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Which IRC section outlines the general rules for RMDs and beneficiary distribution options?
a. IRC Sec. 401(a)(9)
b. IRC Sec 402
c. IRC Sec. 408
d. IRC Sec. 408A

IRC Sec. 401(a)(9)

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Which IRC section details the rules specific to Roth IRAs?
a. IRC Sec. 401(a)(9)
b. IRC Sec 402
c. IRC Sec. 408
d. IRC Sec. 408A

IRC Sec. 408A

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Which IRC section explains the rules for rolling over employer-sponsored retirement plan assets to IRAs?
a. IRC Sec. 401(a)(9)
b. IRC Sec 402
c. IRC Sec. 408
d. IRC Sec. 408A

IRC Sec 402

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Which IRC section authorizes the deductions allowed for certain types of IRA contributions? This section also prescribes the contribution limits for annual Traditional and Roth IRA contributions.
a. IRC Sec. 72(t)
b. IRC Sec. 219
c. IRC Sec 402
d. IRC Sec. 408

IRC Sec. 219

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Which IRC section outlines the general rules applying to IRAs?
a. IRC Sec. 401(a)(9)
b. IRC Sec 402
c. IRC Sec. 408
d. IRC Sec. 408A

IRC Sec. 408

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Which source document is the primary source of rules governing IRAs?
a. Internal Revenue Code
b. Announcements and Notices
c. Revenue Rulings
d. IRS Publications

Internal Revenue Code

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Which source document is the IRS’ response to an IRA owner’s specific written request (the response may be relied on only by the IRA owner who made the request)?
a. Internal Revenue Code
b. Private Letter Rulings
c. Treasury Regulations
d. Revenue Procedures

Private Letter Rulings

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Which source document is issued by the IRS to provide immediate information?
a. Internal Revenue Code
b. Announcements and Notices
c. Revenue Rulings
d. IRS Publications

Announcements and Notices

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Which source document is the IRS’ interpretation of the Internal Revenue Code?
a. Internal Revenue Code
b. Private Letter Rulings
c. Treasury Regulations
d. Revenue Procedures

Treasury Regulations

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Which source document is an in-depth interpretation of a particular section of the Internal Revenue Code or Treasury Regulations as applied to a specific set of facts?
a. Internal Revenue Code
b. Revenue Procedures
c. Treasury Regulations
d. Revenue Rulings

Revenue Rulings

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Which source document is guidance from the IRS that focuses on procedures and administrative matters?
a. Internal Revenue Code
b. Revenue Procedures
c. Treasury Regulations
d. Revenue Rulings

Revenue Procedures

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Which source document is an explanation of IRA rules in layman’s terms?
a. Internal Revenue Code
b. IRS Publications
c. Announcements and Notices
d. IRS Forms and Instructions

IRS Publications

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Which source document is a list of IRA rules and procedures that are not available elsewhere?
a. Internal Revenue Code
b. IRS Publications
c. Announcements and Notices
d. IRS Forms and Instructions

IRS Forms and Instructions

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Which types of IRAs may be offered by financial organizations? Which may not?
HSAs
Simple IRAs
Coverdell ESAs
Roth IRAs
Traditional IRAs

Yes: Simple IRAs, Roth IRAs, Traditional IRAs
No: HSA & Coverdell ESAs

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According to Publication 590-A, when does the 60-day period for determining an eligible rollover begin?

60th day after the day you RECEIVE the distribution from your Traditional IRA or your employer’s plan.

What is a private letter ruling?
a. Interpretation of Internal Revenue Code by the IRS
b. The IRS reviews a specific individual’s case.
c. Describes procedures to comply with IRS rules
d. Explains different tax topics in nontechnical language

The IRS reviews a specific individual’s case.

Who may rely on a private letter ruling?
a. Any taxpayer with a similar situation to which the private letter ruling pertains.
b. Any taxpayer with the exact situation to which the private letter ruling pertains.
c. Only the individual to which the private letter ruling pertains.
d. All taxpayers—regardless of the situation described in the private letter ruling.

Only the individual to which the private letter ruling pertains.

What are the two types of individual retirement arrangements?

IR Account
IR Annuity

Which branch of the government is responsible for enforcing the rules that pertain to IRA’s?

Executive Branch

Traditional IRA Benefits, choose all that apply?
a. Tax deferred earnings
b. Possible tax credit for contributions
c. Possible tax free qualified distributions
d. Possible tax deductible contributions

a. Tax deferred earnings
b. Possible tax credit for contributions
d. Possible tax DEDUCTIBLE CONTRIBUTIONS

Tax Benefits for Roth IRA, choose all that apply?
a. Tax deferred earnings
b. Possible tax credit for contributions
c. Possible tax free qualified distributions
d. Possible tax deductible contributions

a. Tax deferred earnings
b. Possible tax credit for contributions
c. Possible tax FREE qualified DISTRIBUTIONS

Which IRS PUBLICATIONS focus on IRA’s?

Publication 590-A & 590-B

Which IRS documents are generally updated on an annual basis and may contain info not found elsewhere?
a. Announcements and notices
b. Revenue rulings
c. IRS Forms & Instructions
d. Internal Revenue Code

IRS Forms & Instructions

Which IRS information sources may be relied on to the same extent as Revenue procedures or Revenue rulings? a. Announcements and notices b. Revenue rulings c. IRS Forms & Instructions d. Internal Revenue Code

Announcements and notices

Which IRS publication is the official IRS interpretation of laws and regulations as applied to a specific set of facts? a. Internal Revenue Code b. Revenue Procedures c. Treasury Regulations d. Revenue Rulings

Revenue rulings

What is the purpose of Treasury regulations?

Treasury regulations interpret legislation written by Congress

What sections would you go to in the IRC to learn more about Accounts & Annuities?

408(a) = IR Accounts 408(b) = IR Annuity

What are the 3 reasons Traditional IRAs were established? a. Lessen the burden of social programs b. Promote economic growth c. Give people more choice and control over their own retirement investments. d. Supplement retirement savings e. Raise the amount of money that can be deposited for retirement.

S P L 1. Supplement retirement savings (supplement personal savings, pensions, & SSA, these are considered insufficient) 2. Promote economic growth (made to F.I. 'S, helps to keep rates low and stimulate business borrowing=increased employment) 3. Lessen the burden of social programs (less likely to rely on social programs)

Which IRC section discusses avoiding disqualified persons and prohibited transactions? a. IRC Sec. 3405 b. IRC Sec. 401(a)(9) c. IRC Sec 402 d. IRC Sec. 4975

IRC SEC. 4975

Which branch of the government writes the laws?

Legislative Branch - written by congress

Which branch of the government enforces and determines penalties for the laws written?

Executive Branch - Treasury - IRS commissioner (president, labor department)

Which branch of the government is responsible for interpreting laws when disputes arise?

Judicial Branch - the courts

Which source of documents announce information that may be of general interest to the public? Sometimes publicizing revenue rulings and procedures. A. IRS Forms & Instructions B. News releases C. Announcements & Notices D. IRS publications

B. News releases

Which internal revenue code covers income tax withholding information? a. IRC Sec. 401(a)(9) b. IRC Sec 4975 c. IRC Sec. 3405 d. IRC Sec. 408A

IRC SEC. 3405