Retirement – 48 Flashcards
Name retirement plan: Eligibility – part-time and full-time employees of public schools or 501(c)(3) organization, but not independent contractors
403(b) plan
Name retirement plan: Eligibility – all full-time employees 21 years old with one year of service must be covered
Profit sharing plan, 401(k) plan
Name retirement plan: Eligibility – Anyone with earned income, but deductible only if not an “active participant” and within AGI limits
IRA
Name retirement plan: Eligibility – All employees 21 years old, earning $550 in 3 of the last 5 years
SEP
Name retirement plan: Eligibility – Owner-employees, 10% partners, and the self-employed may establish plans; must cover full-time employees age 21 with 12 months of service
Keogh
Name retirement plan: Contribution limits – 25% of payroll; also the lesser of 100% of income or $52,000
Profit-sharing plan, 401(k) plan
Name retirement plan: Contribution limits – lesser of 100% of income or $52,000
403(b) plan
Name retirement plan: Contribution limits – $5500 ($11,000 for couples); “catch-up” provisions apply for individuals aged 50 and older
IRA
Name retirement plan: Contribution limits – Lesser of 25% of earned income or up to $52,000
SEP
Name retirement plan: Contribution limits – if defined-contribution: 25% of net income (20% of gross), the lesser of 100% of income or $52,000; if defined-benefits: minimum funding standard apply
Keogh
Name retirement plan: Salary reduction – no
Profit-sharing plan, SEP
Name retirement plan: Salary reduction – $17,500 maximum salary reduction; “catch-up” provisions apply for employees aged 50 and older
401(k) plan, 403(b) plan
Name retirement plan: Salary reduction – $17,500 maximum salary reduction; “catch-up” provisions apply for employees aged 50 and older; additional “catch-up” for employees with 15 years of service
403(b) plan
Name retirement plan: Salary reduction – if deductible, taxable income is reduced
IRA
Name retirement plan: Salary reduction – if 401K plan: $17,500; catch-up provisions may apply
Keogh
Name retirement plan: Investments – can buy life insurance and other investments
Profit-sharing plan, Keogh
Name retirement plan: Investments – employees often direct own investments through plan options; can buy limited amount of life insurance
401(k) plan
Name retirement plan: Investments – fixed and variable annuities or mutual fund shares; can have life insurance in the annuity
403(b) plan
Name retirement plan: Investments – no life insurance and no collectibles except gold, silver and platinum coins issued in the US, and gold, silver, platinum, and palladium bullion; no margin accounts
IRA, SEP
Name retirement plan: Loans – not needed because early withdrawals can be permitted after two years
Profit-sharing plan
Name retirement plan: Loans – yes
401(k) plan, 403(b) plan, Keogh
Name retirement plan: Loans – no
IRA, SEP
Name retirement plan: Early Withdrawals – yes, after two years, but subject to income tax; 10% penalty unless an exception applies
Profit-sharing plan
Name retirement plan: Early Withdrawals – no, unless for death, disability, or financial hardship; all withdrawals are taxable income; 10% penalty unless an exception applies
401(k) plan, 403(b) plan
Name retirement plan: Early Withdrawals – permitted, but is taxable income and has a 10% penalty
IRA, SEP, Keogh
(48.3) Anyone who has earned income and has not attained age ___ may make contributions to an IRA. Contributions are limited to the lesser of?
70 1/2
100% of earned income or $5,500 per year
(48.3) For an IRA, taxpayers aged 50 and older can make additional catch-up contributions of?
$1,000 per year
(48.3) Government plans include section 457 plans for state and federal employees. A 457 plan for a ___, however, is not a government plan, so participants in a 457 plan at a ___ will not be treated as active participants.
- nonprofit organization
- nonprofit
(48.3) Traditional IRA active participant AGI phaseout ranges – Single
$60,000-$70,000
The IRA deduction cannot be below ___ unless the maximum deductible amount is reduced to zero.
$200
(48.3) Traditional IRA active participant AGI phaseout ranges – Married filing jointly
$96,000-$116,000
IRA: Persons eligible for the deductible contributions – a married person below age 70 1/2, filing jointly, who is not an active participant in an employer’s qualified plan, even though the spouse is an active participant, if the couple has adjusted gross income below?
$181,000
IRA: Persons eligible for the deductible contributions – A married person below age 70 1/2, who is an active participant in an employer’s qualified plan, if the couple has adjusted gross income below?
$96,000
IRA: Persons eligible for the deductible contributions – A single person below age 70 1/2, who is an active participant in an employer’s qualified plan, and who has adjusted gross income below?
$60,000
IRA: Persons partially eligible for deductible contributions – A married person who is not an active participant in an employer’s qualified plan, even though the spouse is an active participant, is permitted a reduced deduction if adjusted gross income is between?
$181,000-$191,000
IRA: Persons partially eligible for deductible contributions – A married person who is an active participant in an employer’s qualified plan is permitted a reduced deduction if adjusted gross income is between?
$96,000-$116,000
IRA: Persons partially eligible for deductible contributions – A single person who is an active participant in an employer’s qualified plan and who has adjusted gross income between ___ is permitted a reduced deduction.
$60,000-$70,000
IRA: payout is mandatory by?
April 1 of the year after the year age 70 1/2 is attained
IRA: monthly or other installment payout after age 59 1/2 – Full amount is taxed as?
Ordinary income
IRA: Penalty for withdrawal prior to age 59 1/2
10% penalty, in addition to normal income tax
IRA: penalty for contributions in excess of a maximum limit or in excess of other permitted amounts?
6% annual penalty until the excess is removed from the account
IRA: penalty for inadequate pay out after age 70 1/2?
50% penalty is applied to the amount of shortfall
IRA: rollover – escapes income tax if the rollover is completed within?
60 days
Roth IRA: AGI phaseout ranges
Single: $114,000-$129,000
MFJ: $181,000-$191,000
MFS: $0 to $10,000
Roth IRA: qualified distributions made five years after the Roth IRA set up
- The owner reaches age 59 1/2
- The death of the owner
- The disability of the owner
- Qualified first-time home buyer expenses up to $10,000
Roth IRA: Mandatory distribution rules do not apply until the individual’s death. The Roth IRA must be distributed within ___ years of the owner’s death when there is no designated beneficiary.
Five
Roth IRA Penalty Exceptions
- age 59 1/2
- death
- disability
- first home purchase (up to $10,000)
- medical insurance premiums while unemployed
- substantially equal periodic payments
- higher education expenses
- medical expenses in excess of 10% floor
___ must cover all employees who have attained age 21 and who have worked for the employer during any three years out of the preceding five years and earned at least $550 during the current year.
SEPs
SEP: annual contributions are limited to 25% compensation on a maximum of ___ of compensation. And also limits the additions to the lesser of ___.
$260,000
100% of compensation or $52,000
An employer can skip contributions today ___ because the recurring and substantial contributions requirement that applies to profit-sharing plans do not apply to ___. Any year’s contributions can be ___ without adverse tax consequences.
SEP
SEPs
ommitted
A retirement plan where the employer may elect to lower the maximum matching contribution from 3% of compensation to some lower percentage (but not less than 1%) in not more than 2 years out of the 5 year period ending with the current year.
SIMPLE IRAs
What is the Sec. 415 limits?
Maximum annual editions limited to the lesser of 100% of compensation or $52,000.
In a SIMPLE IRA, The maximum salary deferral contribution is limited to ___. The employer is required to make either: A) matching contributions of 100% of each employee’s salary deferral contribution, up to a maximum of ___% of the employee’s compensation, or B) a contribution of ___% of compensation for each eligible employee, regardless of whether or not the employee made any salary deferral contributions.
3%
2%
___ must cover all employees who have attained age 21 and who have worked for the employer during any three years out of the preceding five years and earned at least $550 during the current year.
SEPs
SEP: annual contributions are limited to 25% compensation on a maximum of ___ of compensation. And also limits the additions to the lesser of ___.
$260,000
100% of compensation or $52,000
An employer can skip contributions today ___ because the recurring and substantial contributions requirement that applies to profit-sharing plans do not apply to ___. Any year’s contributions can be ___ without adverse tax consequences.
SEP
SEPs
ommitted
A retirement plan where the employer may elect to lower the maximum matching contribution from 3% of compensation to some lower percentage (but not less than 1%) in not more than 2 years out of the 5 year period ending with the current year.
SIMPLE IRAs
What is the Sec. 415 limits?
Maximum annual editions limited to the lesser of 100% of compensation or $52,000.
In a SIMPLE IRA, The maximum salary deferral contribution is limited to ___. The employer is required to make either: A) matching contributions of 100% of each employee’s salary deferral contribution, up to a maximum of ___% of the employee’s compensation, or B) a contribution of ___% of compensation for each eligible employee, regardless of whether or not the employee made any salary deferral contributions.
3%
2%
___ must cover all employees who have attained age 21 and who have worked for the employer during any three years out of the preceding five years and earned at least $550 during the current year.
SEPs
SEP: annual contributions are limited to 25% compensation on a maximum of ___ of compensation. And also limits the additions to the lesser of ___.
$260,000
100% of compensation or $52,000
An employer can skip contributions today ___ because the recurring and substantial contributions requirement that applies to profit-sharing plans do not apply to ___. Any year’s contributions can be ___ without adverse tax consequences.
SEP
SEPs
ommitted
A retirement plan where the employer may elect to lower the maximum matching contribution from 3% of compensation to some lower percentage (but not less than 1%) in not more than 2 years out of the 5 year period ending with the current year.
SIMPLE IRAs
What is the Sec. 415 limits?
Maximum annual editions limited to the lesser of 100% of compensation or $52,000.
In a SIMPLE IRA, The maximum salary deferral contribution is limited to ___. The employer is required to make either: A) matching contributions of 100% of each employee’s salary deferral contribution, up to a maximum of ___% of the employee’s compensation, or B) a contribution of ___% of compensation for each eligible employee, regardless of whether or not the employee made any salary deferral contributions.
3%
2%
(48.3) A taxpayer is an ____ if he/she accrues a benefit or has an annual addition (____) made to one of the employer-sponsored (___) retirement plans.
- “active participant”
- contribution or forfeiture
- non-IRA
(48.3) A taxpayer is an ___ if the taxpayer is eligible to participate in a defined-benefit plan but selects not to participate.
- “active participant”
