Retirement

Question 1

Under the purchasing power preservation retirement funding calculation, what type of interest rate is used?

Answer 1

The inflation-adjusted rate

Question 2

Under the capital preservation retirement funding calculation, what type of interest rate is used?

Answer 2

The nominal rate

Question 3

The self-employment tax is 15.3% ___ is SS and ___is Medicare

Answer 3

12.4% Social Security + 2.9% Medicare

Question 4

n 2023, what is the maximum annual earnings considered in the Social Security AIME calculation?

Answer 4

$160,200

Question 5

The calculated income upon which the taxation of Social Security benefits is based is referred to as

Answer 5

provisional income.
50% of Social Security benefits + tax-exempt income + AGI (without Social Security) = provisional income

Question 6

The level of provisional income at which 85% of Social Security benefit are subject to regular income tax for married filing separately is ______.

Answer 6

$0

Question 7

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 ________.

Answer 7

$44,000

Question 8

SS benefits are increased___ for each year delayed to age ____.

Answer 8

8% 70

Question 9

Taking SS early give a reduced benefit by a maximum of:

Answer 9

30%

Question 10

Section 403(b) plans and can defer an additional ___ through the plan sponsored by an employer of __ years under the special catch-up allowance.

Answer 10

$3,000 15

Question 11

A traditional defined benefit pension plan must vest at least as generously as

Answer 11

5-year cliff or 3-7 year graded.

Question 12

All defined contribution plans must use a vesting schedule at least as generous as

Answer 12

3-year cliff or 2-to-6-year graded vesting

Question 13

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.

Answer 13

three twice cannot

Question 14

For 2023, the maximum benefit possible in a traditional defined benefit plan is

Answer 14

$265,000.

Question 15

When does a Target Benefit Pension Plan require an actuary?

Answer 15

only in the first year of the plan.

Question 16

2 types of defined benefit (DB) pension plans

Answer 16

Cash Balance Pension Plan
Traditional Defined Benefit Pension Plan

Question 17

A ______ plan is the most common underlying qualified plan to which a Section 401(k) provision is added.

Answer 17

profit-sharing

Question 18

Section 403(b) plans may invest only in ___ and ____

Answer 18

sponsored mutual funds and annuities.

Question 19

Max contribution to a SEP calculation

Answer 19

Earnings - 50% of SE tax * 20%

Question 20

The maximum compensation that may be considered in the benefit formula of a defined contribution plan is referred to as the ___________________________.

Answer 20

Covered compensation limit

Question 21

Which additional nondiscrimination test applies to employer matching contributions into a Section 401(k) plan?

Answer 21

The actual contribution percentage (ACP) test

Question 22

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.

Answer 22

10%

Question 23

A traditional cash balance pension plan must vest at least as generously as

Answer 23

Must use a 3 year cliff

Question 24

The maximum deductible employer contribution to a defined contribution plan is ____of covered payroll.

Answer 24

25%

Question 25

the shortcut rate of ___ is multiply by the self-employed person’s net earnings from self-employment to quickly calculate the maximum contribution.

Answer 25

18.59%

Question 26

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.

Answer 26

one two

Question 27

Employer match option for a SIMPLE is

Answer 27

100% match of the first 3% deferred by the employee.

Question 28

In a SIMPLE 401(k), the employer match cannot go below ___

Answer 28

3%

Question 29

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.

Answer 29

$5,000 2 $5,000

Question 30

Qualifying Incentive Stock Option (ISO) distributions involve a sale that occurs _______ from grant and _______ from exercise.

Answer 30

two years from grant and one year from exercise

Question 31

Tax-Advantaged Plans include:

Answer 31

403(b)
457 Plans
SEP
SIMPLE

Question 32

Withdrawals from a SIMPLE IRA in the first two years of participation are subject to

Answer 32

a 25% early withdrawal penalty tax.

Question 33

For 2023, what is the maximum salary deferral into a newly established Simplified Employee Pension (SEP) for a participant who is age 45?

Answer 33

A SEP plan is 100% employer funded. Participants do not make salary deferrals into a SEP.

Question 34

SEP Eligibility Rules:

Answer 34

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.

Question 35

Regular Roth Contributions receive the following Non-Qualified Distribution treatment:

Answer 35

No Income Tax
No Penalty

Question 36

For a Qualifying Roth Ira distribution after 5 years, what must occur?:

Answer 36

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