Retirement Flashcards
Under the purchasing power preservation retirement funding calculation, what type of interest rate is used?
The inflation-adjusted rate
Under the capital preservation retirement funding calculation, what type of interest rate is used?
The nominal rate
The self-employment tax is 15.3% ___ is SS and ___is Medicare
12.4% Social Security + 2.9% Medicare
n 2023, what is the maximum annual earnings considered in the Social Security AIME calculation?
$160,200
The calculated income upon which the taxation of Social Security benefits is based is referred to as
provisional income.
50% of Social Security benefits + tax-exempt income + AGI (without Social Security) = provisional income
The level of provisional income at which 85% of Social Security benefit are subject to regular income tax for married filing separately is ______.
$0
The level of provisional income at which 85% of Social Security benefit are subject to regular income tax for married filing jointly tax filers is ________.
$44,000
SS benefits are increased___ for each year delayed to age ____.
8% 70
Taking SS early give a reduced benefit by a maximum of:
30%
Section 403(b) plans and can defer an additional ___ through the plan sponsored by an employer of __ years under the special catch-up allowance.
$3,000 15
A traditional defined benefit pension plan must vest at least as generously as
5-year cliff or 3-7 year graded.
All defined contribution plans must use a vesting schedule at least as generous as
3-year cliff or 2-to-6-year graded vesting
Section 457(b) Special Catch Up is available for the last ____years of service (at plan normal retirement age), can be up to ____ the normal contribution limit, and the 50+ catch up ______ be used in addition.
three twice cannot
For 2023, the maximum benefit possible in a traditional defined benefit plan is
$265,000.
When does a Target Benefit Pension Plan require an actuary?
only in the first year of the plan.
2 types of defined benefit (DB) pension plans
Cash Balance Pension Plan
Traditional Defined Benefit Pension Plan
A ______ plan is the most common underlying qualified plan to which a Section 401(k) provision is added.
profit-sharing
Section 403(b) plans may invest only in ___ and ____
sponsored mutual funds and annuities.
Max contribution to a SEP calculation
Earnings - 50% of SE tax * 20%
The maximum compensation that may be considered in the benefit formula of a defined contribution plan is referred to as the ___________________________.
Covered compensation limit
Which additional nondiscrimination test applies to employer matching contributions into a Section 401(k) plan?
The actual contribution percentage (ACP) test
A profit-sharing plan may invest 100% in employer stock but other qualified plans, such as a money purchase pension plan are limited to ____ in employer stock.
10%
A traditional cash balance pension plan must vest at least as generously as
Must use a 3 year cliff
The maximum deductible employer contribution to a defined contribution plan is ____of covered payroll.
25%
the shortcut rate of ___ is multiply by the self-employed person’s net earnings from self-employment to quickly calculate the maximum contribution.
18.59%
A qualified disposition from ISO requires the sale to happen at least ___ year from the time of exercise and at least___ years from the time of grant.
one two
Employer match option for a SIMPLE is
100% match of the first 3% deferred by the employee.
In a SIMPLE 401(k), the employer match cannot go below ___
3%
SIMPLE IRAs may be available to employees who have earned at least __ in each of the past __ years and are expected to earn __ are eligible.
$5,000 2 $5,000
Qualifying Incentive Stock Option (ISO) distributions involve a sale that occurs _______ from grant and _______ from exercise.
two years from grant and one year from exercise
Tax-Advantaged Plans include:
403(b)
457 Plans
SEP
SIMPLE
Withdrawals from a SIMPLE IRA in the first two years of participation are subject to
a 25% early withdrawal penalty tax.
For 2023, what is the maximum salary deferral into a newly established Simplified Employee Pension (SEP) for a participant who is age 45?
A SEP plan is 100% employer funded. Participants do not make salary deferrals into a SEP.
SEP Eligibility Rules:
Age 21
Worked for sponsor three of five prior years
Minimum compensation $750 per year (2023)
May exclude union members and non-resident aliens
Eligible employer for SIMPLE Plans may have no more than 100 employees who earned at least $5,000 in the preceding year.
Regular Roth Contributions receive the following Non-Qualified Distribution treatment:
No Income Tax
No Penalty
For a Qualifying Roth Ira distribution after 5 years, what must occur?:
The distribution must occur in relation to one of the following circumstances:
The account owner’s death
The account owner being disabled
First-time homebuyers (up to $10,000)
Made on or after the individual attains 59 ½
