Retirement Plans

Question 1

When a qualified plan starts making payments to its recipient, which portion of the distributions is taxable?

Answer 1

Gains

Question 2

Within how many days must a Traditional IRA be rolled over to another IRA in order to avoid tax consequences?

Answer 2

60

Question 3

Dana is an employee who deposits a percentage of her income into her individual annuity. Her company also contributes a percentage into a separate company pension plan. What kind of annuity is this considered?

Answer 3

Qualified retirement annuity

Question 4

Which of the following would disqualify a company’s retirement plan from receiving favorable tax treatment?
A) contains a vesting schedule
B) contributions are applied with no regard to income
C) formed for the sole benefit of employees and their beneficiaries
D) it is temporary

Answer 4

D) it is temporary

Question 5

Which of the following employers is required to follow ERISA regulations?
A) a local government with 150 employees
B) a church with 30 employees
C) a local electrical supply company with 12 employees
D) a Canadian company with 300 employees working in the United States

Answer 5

C) a local electrical supply company with 12 employees

Question 6

Rob has a benefit at work which enables him to defer his current receipt of income and have it paid at a later date, when he will probably be in a lower tax bracket. Which benefit fits this description?

Answer 6

Deferred compensation option

Question 7

An example of a tax-qualified retirement plan would be a(n)

Answer 7

Defined contribution plan

Question 8

How are contributions made to a Roth IRA handled for tax purposes?

Answer 8

Not tax deductible

Question 9

A Roth IRA owner must be at least what age in order to make tax-free withdrawals?

Answer 9

59 1/2 and owned account for a minimum of 5 years

Question 10

Which of these statements concerning Traditional IRAs is CORRECT?
A) earnings are not taxable when withdrawn
B) earnings are taxable when withdrawn
C) contributions are never tax-deductible
D) contributions are always made by the employer

Answer 10

B) earnings are taxable when withdrawn

Question 11

All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT
A) qualified college expenses
B) first time home purchase
C) death of the participant
D) stock purchase

Answer 11

D) stock purchase

Question 12

Which of the following is NOT a federal requirement of a qualified plan?
A) must benefit a broad cross-section of employees
B) employee must be able to make unlimited contributions
C) vesting schedule must be defined
D) employer establishes the plan

Answer 12

B) employee must be able to make unlimited contributions

Question 13

Which of these retirement plans do NOT qualify for a federal income tax deduction?
A) SIMPLE Plan
B) Traditional IRA
C) Keogh Plan
D) Roth IRA

Answer 13

D) Roth IRA

Question 14

A rollover from a Traditional IRA to another IRA MUST be done within _____ days to avoid tax consequences

Answer 14

60

Question 15

Mike has inherited his father’s traditional IRA. As beneficiary, he will pay _____ taxes on any money withdrawn

Answer 15

Income