Retirement Planning

Question 1

Eligibility for Social Security (Spouse of a retired or disabled worker)

Answer 1

• Age 62 or older
• Child in care under 16
• Child over 16 and disabled

Question 2

This kind of annuity provides the highest payout to a retiree.

Answer 2

Pure life / Straight Life annuity

Question 3

This kind of annuity provides retirement income to a spouse or other dependent. (Good for Estate Liquidity)

Answer 3

Joint and Survivor

Question 4

Eligibility for Social Security (Widow)

Answer 4

Widower must be age 60 or over, or have a child in care under 16.

Question 5

Eligibility for Social Security (Child)

Answer 5

If worker is deceased, disabled or retired, the child needs to be under age 19 and a full time student…OR age 18 and over but has a disability which becan before age 22.

Question 6

When can a fully insured worker start receiving retirement benefits?

Answer 6

The month after they reach age 62.

Question 7

Nonqualified Plans - Employer Tax Deductions

Answer 7

Employer cannot take deductions until employee is taxed.

Question 8

Cash Balance Pension Plan - What Does Employer Guarantee

Answer 8

Contribution level AND minimum rate of return (Defined benefit)

Question 9

Who would choose a Cash Balance Plan?

Answer 9

Midsize or large company that has a well funded defined benefit plan and is looking to save on contributions.

Question 10

Which retirement plans may forfeitures increase account balances of plan participants?

Answer 10

PSP and Money Purchase

Question 11

When would a plan be considered top heavy?

Answer 11

More than 60% of its accrued benefits are allocated to KEY employees.

Question 12

Four plans that can be integrated with Social Security

Answer 12

Stock Bonus, SEP, Defined Benefit, Target Benefit

Question 13

Three plans that are prohibited from loan provisions

Answer 13

SEPS, SIMPLES, and IRAS

Question 14

Traditional IRA - Who can Participate?

Answer 14

Cannot participate if you are not being compensated (Earned income). Also must consider spousal retirement accounts.

Question 15

Roth IRA - Who can Participate?

Answer 15

AGI Limitation and you must have EARNED income.

Question 16

These kinds of investments are not allowed in 403(b)

Answer 16

Unit Investment Trusts

Question 17

Who Enforces ERISA?

Answer 17

The DOL

Question 18

These types of investments are popular for Defined Benefit Plans

Answer 18

GICs - generally they have a 2-7 year maturity

Question 19

Can SIMPLE Plans purchase life insurance?

Answer 19

NO

Question 20

Only this type of plan can hold second to die insurance

Answer 20

Profit Sharing Plan

Question 21

Are SEPS subject to FICA and FUTA?

Answer 21

No

Question 22

When are you eligible to rollover a SIMPLE?

Answer 22

After 2 years of service.

Question 23

These types of plans require the spouse to be the beneficiary.

Answer 23

Pension Plans - Defined Benefit, Cash Benefit, Money Purchase, and Target Benefit

Question 24

True or False: QDROs apply to IRAs.

Answer 24

False

Question 25

A direct distribution from a qualified plan requires the plan administrator to withhold _____%?

Answer 25

20%

Question 26

What if an individual with two IRA accounts needs to take RMDs?

Answer 26

Calculate the RMD from the aggregate IRA values and then take the total RMD from one plan.

Question 27

What does an "informally" funded plan mean? (AKA Unfunded)

Answer 27

The assets are owned by the company and are subject to the company's creditors.

Question 28

When is the employee taxed under an unfunded plan?

Answer 28

When he or she has constructive receipt or economic benefit.

Question 29

If the holding requirements are met for an ISO - how will the resulting gain be taxed?

Answer 29

As a Long Term Cap Gain (favorable)

Question 30

When is the interest from a 401(k) loan to purchase a house deductible?

Answer 30

Must be a rank and file employee and the loan must be secured with the primary residence.

Question 31

What is the penalty for withdrawing a SIMPLE before two years is up?

Answer 31

25% early withdrawal penalty.

Question 32

Which kind of investment may produce UBTI income?

Answer 32

Equipment Leasing Program

Question 33

Does a Rabbi Trust automatically trigger constructive receipt?

Answer 33

NO - assets are still held by the company

Question 34

What sorts of things could affect a target benefit plan participant's retirement benefits?

Answer 34

- Age - Compensation - Investment Performance - Actuarial Assumptions

Question 35

Do SEPs have loan provisions?

Answer 35

NO

Question 36

What is the phaseout for Coverdell?

Answer 36

190k to 220k

Question 37

What is the phaseout for Roth?

Answer 37

118 - 133k (Single) | 186k - 196k (MFJ)

Question 38

When my an employee avoid receipt of taxable income in a funded nonqualified deferred compensation plan?

Answer 38

When there is substantial risk of forfeiture.

Question 39

True or False: Every type off qualified plan can offer a loan feature.

Answer 39

TRUE!

Question 40

True or False: Use of company apartment on weekends is tax-free to the employee.

Answer 40

False - weekends makes it taxable.

Question 41

true or false

Answer 41

test