Retirement Chapter 6: Individual Retirement Accounts Flashcards
Are S-corporation distributions unearned income?
Yes; K-1 distributions
Is informally funded deferred compensation earned income?
No because it is not constructively received
What is included in earned income for IRA contributions?
1) salaries, wages, tips, professional fees, and bonuses
2) BoD fees
3) alimony and separate maintenance payments received under a divorce settlement pre-2019
Profit sharing plans are ___ subject to minimum funding requirements while _____ ________ and _______ _______ plans are.
Not; money purchase; defined benefit
Are hardship withdrawals available for 401(k) plans?
Yes
Are loans from IRAs allowed?
No
Generally, a loan from an IRA is disqualified and results in a “deemed distribution” of the account.
True
If all or part of the IRA is pledged as security for a loan, the portion that is pledged is treated as a distribution.
True
Can contributions be made after age 73?
Yes
Can non-spouse beneficiaries of a qualified plan make a 60-day rollover?
No
What is the ordering rules for Roth distributions?
1) Roth contributions are considered to be withdrawn first
2) converted amounts
3) earnings
Regular contributions are distributed tax-free no matter when they are withdrawn (Roth).
True
What is the only allowable circumstance under which Roth characterization is permitted?
When the taxpayer’s AGI exceeds the contribution threshold for that year
Only a Roth and a Roth inherited by a spouse are not subject to the RMD rules.
True
Are there income restrictions on conversions to Roth IRAs?
No
A participant cannot roll over their Roth 401(k) account to a traditional IRA, a governmental 457, or any type of qualified plan without a Roth 401(k) type option.
True
Employers may match Roth 401(k) deferrals but the match can be made in pre-tax dollars only.
False; pre-tax or Roth dollars
How much can individuals contribute to an ABLE account?
Up to $18,000 annually
Distributions from ABLE accounts used for qualified disability expenses are not included in gross income if the beneficiary becomes disabled before age __.
26
The ABLE account is exempt from the $____ limit on personal assets for ________ and ___.
$2,000; Medicaid; SSI
Are rollovers from 529 plans to ABLE accounts allowed?
Yes, without penalty provided the ABLE account beneficiary is the same as the 529 beneficiary or a family member. The rollover would count toward the annual contribution limit for the ABLE account.
How many ABLE accounts may a disabled be a beneficiary of?
1
ABLE account contributions are deductible.
False; they are not deductible.
Substantially equal payments can start at any age, but they must be over the owner’s life expectancy.
True
