Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

LAH Course > Qualified and Other Retirement Plans, Group Life Insurance and Social Security > Flashcards

Qualified and Other Retirement Plans, Group Life Insurance and Social Security Flashcards

1
Q

An employer contributes _____% of an employee’s wages to Social Security.

A

7.65%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

True or False: SEPs require employees to become immediately vested in the full amount contributed.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What retirement plan is available to self-employed individuals?

A

There are two plans specifically available to the self-employed–a Keogh and a SEP IRA.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

The maximum contribution to an IRA is the lesser of $_______ or ____% of earned income.

A

The maximum contribution to an IRA is the lesser of $6,000 or 100% of earned income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What penalty is assessed on the withdrawal of funds for an unqualified expense from a 529 Plan?

A

A 10% IRS penalty plus federal taxation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Who bears the investment risk in a defined benefit plan?

A

The employer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How many quarters of contribution credit does a currently insured individual have under the Social Security system?

A

Currently insured is determined by an individual who has made a FICA contribution in 6 of the last 13 quarters.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

True or False: Defined benefit programs determine retirement benefits using income average and years of service.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

If an employer makes a Keogh contribution on his own behalf, what must be done for his employees?

A

Employee contributions must be at the same percentage as made for the employer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Is a person permitted to contribute to her own 529 plan?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Provide examples of individuals who would qualify to participate in a 403(b) plan.

A

School and university employees, nurses, and individuals who work for other types of nonprofit organizations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

For whom is a 457 deferred compensation program designed?

A

Those who work for a municipality (e.g. state employees)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

A 401(k) plan uses _________ contributions and the growth of the account is _______________.

A

A 401(k) plan uses PRE-TAX contributions and the growth of the account is TAX-DEFERRED.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Per Social Security, how many quarters of SS contributions are needed to be fully insured?

A

40 quarters of FICA contributions (not consecutive) or 10 years (according to Social Security)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How are withdrawals from a Traditional IRA treated for tax purposes?

A

If all contributions were deductible, then the entire withdrawal is taxed as ordinary income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Identify the acronym: SIMPLE

A

Savings Incentive Match Plans for Employees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Employer contributions into an employee qualified plan are _______________ to the employer.

A

deductible

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

The lump-sum death benefit of Social Security is $_____ as of 2010.

A

$255

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Who is eligible to make tax-deductible contributions to an IRA?

A

A person not covered by an employer plan, or, if covered, a person who meets the income restriction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Describe the tax treatment of contributions made to a 529 plan.

A

The contributions are made after-tax, but may possibly grow tax-free.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is waived for the first-time homebuyer in the event of an IRA distribution?

A

The IRS penalty is waived; however, the withdrawal is subject to tax.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

A rollover of qualified plan money from one account to another must be completed within ____ days of withdrawal.

A

60 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

An individual turns age 72 in December. When must she begin the RMDs from her IRA?

A

By April 1 of the following year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Who bears the investment risk in a defined contribution plan?

A

The employee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What are some of the acceptable investments for IRA contributions?

A

Stocks, bonds, mutual funds, and CDs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

How is Social Security funded?

A

By payroll taxes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Qualified plan withdrawals prior to age 59 1/2 are taxable and also subject to a ____% IRS early withdrawal penalty.

A

10%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Are employer contributions to an employee qualified retirement account considered income to the employee?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

True or False: A profit-sharing plan requires annual contributions regardless of the company’s profitability.

A

False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

How much may be contributed to a 529 plan and avoid gift tax?

A

A donor may give up to $16,000 per year and avoid the gift tax.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

True or False: If 529 plan funds are not used for a child’s education, they may be transferred to a relative’s plan.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Hank, age 71, has a Roth IRA. What penalty is assessed for his failure to begin distributions?

A

There is no penalty since Roth IRAs do not have a required minimum distribution.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Define vesting.

A

The right an employee gradually acquires by the length of service at a company to receive employer-contributed benefits

34
Q

Who funds a 529 plan?

A

The donor

35
Q

How are withdrawals from Roth IRAs treated for tax purposes?

A

Withdrawals are tax-free if the account is open for at least five years and is not considered an early withdrawal.

36
Q

For what reasons may an individual take an early withdrawal from his IRA without penalty?

A

Death, disability, qualified higher education, home buyer ($10,000 limit), birth or adoption of a child ($5,000 limit)

37
Q

How much may a married couple earning $325,000 contribute to a Roth IRA?

A

$0, since the couple’s income, exceeds the income threshold

38
Q

What type of group plan requires the employee to pay all or part of the insurance premium?

A

A contributory group plan

39
Q

True or False: Defined contribution plans focus on contribution amounts, but do not guarantee preset retirement amounts.

A

True

40
Q

hat right does the “incident of ownership” provide to an employee?

A

An employee’s “incident of ownership” allows the employee the right to name or change a beneficiary designation.

41
Q

What is a Coverdell Education Savings Plan?

A

A savings plan that funds both elementary and higher education

42
Q

True or False: The larger the database of statistics, the more predictable loss ratios become.

A

True, according to the law of large numbers.

43
Q

In general, a 401(k) plan is available to individuals who work for a ____________ corporation.

A

for-profit

44
Q

For what reasons may early withdrawals be taken without the 10% IRS penalty applying?

A

Death, disability, divorce, qualified financial hardship, and qualified loans

45
Q

True or False: Social Security benefits are based on the Primary Insurance Amount (PIA) and the insured’s SS status.

A

True

46
Q

When may a person begin taking penalty-free withdrawals from her 401(k)?

A

As early as age 59 1/2

47
Q

A fully insured individual under the Social Security system has how many quarters of contribution credit?

A

Fully insured means a FICA contribution of at least 40 quarters.

48
Q

A contribution of $_______ may be made to a Spousal IRA for a non-working spouse.

A

$6,000

49
Q

When an individual reaches age ______, he may begin withdrawing from an IRA without penalty.

A

59 1/2

50
Q

For what type of individual is a 403(b) plan primarily designed?

A

An individual who works for a nonprofit organization

51
Q

Is there an income threshold for 529 College Savings Plan contributors?

A

No. There are no income limits imposed for these plans.

52
Q

List some of the benefits provided by Social Security.

A

Medicare, retirement, survivors, disability, dependent benefits, and a life insurance death benefit

53
Q

There is a ____% penalty for early withdrawals from an IRA.

A

10%

54
Q

In what form must IRA contributions be made?

A

In cash

55
Q

What is another name for Social Security?

A

Old Age, Survivors, Disability, and Health Insurance program

56
Q

Prior to age 59 1/2, penalty-free withdrawals from an IRA may be taken for ______________________ expenses.

A

qualified educational

57
Q

When must IRA withdrawals begin in order to avoid the late withdrawal penalty?

A

By April 1st of the year after an individual turns age 72

58
Q

In group life insurance, premiums paid for death benefits over $______ are taxed as ordinary income to employees.

A

$50,000

59
Q

Social Security contribution taxes are known as _____ taxes.

A

FICA

60
Q

What is another name for a 403(b) plan?

A

A tax-sheltered annuity

61
Q

For employers offering SEP plans, where are contributions made on behalf of their employees directed?

A

In the employee’s individual SEP IRA

62
Q

What is a bad risk or selection called?

A

Adverse selection

63
Q

May an aunt set up a 529 plan for her nieces?

A

Yes. The donor of a 529 plan is not required to be a parent.

64
Q

May individuals invest in an out-of-state 529 plan?

A

Yes. Individuals may chose to invest in an in-state or out-of-state 529 plan.

65
Q

What percentage does an employer pay in a noncontributory group plan?

A

100%

66
Q

If a married person dies, what can be done with her IRA assets?

A

These assets may be combined with those of her surviving spouse

67
Q

What is used to verify group participation and is given to enrolled employees?

A

A certificate of coverage

68
Q

Anyone with ________ income may contribute to an IRA.

A

earned

69
Q

How much may be contributed to a Coverdell each year?

A

An after-tax contribution of $2,000 is allowed per year.

70
Q

In a 529 Plan, what happens if the funds are withdrawn, but not used for qualified education expenses?

A

The earnings would be subject to ordinary income tax plus a 10% penalty.

71
Q

What provides a detailed description of the group plan that is given to the employer?

A

Master contract

72
Q

Define the term: Persistency

A

The length of time a group insurer has provided coverage for a particular insured group

73
Q

_________ are college savings plans with high contribution limits set by the state sponsor.

A

529 Plans

74
Q

True or False: Qualified plans receive favorable tax treatment by the IRS.

A

True

75
Q

Contributions to a Keogh plan are solely based on _________________ income.

A

self-employment

76
Q

How is a Roth IRA contribution different from a traditional IRA contribution?

A

Roth IRA contributions are always made after-tax, while traditional IRA contributions are deductible.

77
Q

What is a Simplified Employee Pension (SEP) Plan?

A

An employer-sponsored IRA for the self-employed and their employees

78
Q

What is the maximum annual IRA contribution for a 58-year-old whose only income is investment income?

A

$0, since the individual has no earned income.

79
Q

Identify the acronym: TSA

A

Tax-Sheltered Annuity (a qualified contract)

80
Q

An employee pays _____% of his wages to Social Security.

A

7.65%

81
Q

Who owns the investments contained within a 457 plan?

A

The employer

82
Q

403(b) contributions are pre-tax contributions made on a ________ reduction basis.

A

salary

LAH Course (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions