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IL Life and Health Insurance > Retirement Plans > Flashcards

Retirement Plans Flashcards

1
Q

Qualified Retirement Plan/Account

A

Receive favorable tax treatment from the IRS

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2
Q

Life insurance generally can’t be used in a…

A

Qualified retirement plan

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3
Q

Annuities might be used to fund or distribute money from a…

A

Qualified retirement plan in various ways

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4
Q

Non-Qualified Retirement Plan/Account

A

May not receive favorable tax treatment

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5
Q

Employees and employers can deduct retirement plan contributions from…

A

Taxable income

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6
Q

Growth within retirement plan/account won’t be taxed until…

A

Withdrawn (tax deferral)

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7
Q

When withdrawn, all money will be…

A

Taxed and treated as income

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8
Q

Different features might apply to…

A

ROTH IRA

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9
Q

Retirement plans have annual limits to…

A

Contributions

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10
Q

What is the penalty if accessed prior to 59.5?

A

10% tax penalty

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11
Q

Exceptions from tax penalty include…

A

Disability, death, education, or first home

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12
Q

Withdrawals must begin by…

A

April 1st of the year the person turns 73

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13
Q

What is the penalty if withdrawals don’t start?

A

Tax penalty of 50% of what should have been withdrawn

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14
Q

Employer retirement plans must be open to…

A

All full-time employees after a certain time

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15
Q

Employee contributions belong fully to…

A

Employee

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16
Q

Employer contributions belong to employee after…

A

A few years

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17
Q

Employer plans that violate these rules are…

A

Non-qualified and won’t have favorable tax status

18
Q

Defined Benefit Plan

A

Members will know what they get at retirement

19
Q

Defined Contribution Plan

A

Members know how much will be put in but now how the account will perform

20
Q

401k’s are setup and administered by…

A

Large employers

21
Q

401k’s often include…

A

Employer matching of employee contributions up to a point

22
Q

403b is also known as…

A

Tax-Sheltered Annuity Plan

23
Q

403b are like 401k but for…

A

Non-profits; common at schools and hospitals

24
Q

Keogh Plan was originally for…

A

Self-employed

25
Q

Keogh plans are funded largely by…

A

Self-employed person’s business, rather than the individual

26
Q

Keogh plans are also known as…

A

HR-10 Plan

27
Q

Other employees must be eligible to participate in Keogh plans if…

A

They’re 21, work at least 1000 hours and have been there for a year

28
Q

Traditional IRA’s were originally for…

A

Employees who did not have retirement plans at work

29
Q

Traditional IRA’s can now be created for…

A

Nearly everyone with earned income

30
Q

Unlike a 401k, traditional IRA’s are generally under investment control of…

A

The individual

31
Q

Employees who also have a qualified plan at work can have an IRA but…

A

Might have a limit on deductible contributions

32
Q

ROTH IRA’s are funded with money that’s…

A

Already been taxed

33
Q

ROTH IRA’s have no taxes on withdrawals if done…

A

After 59.5 and account is at least 5 years old

34
Q

ROTH IRA’s have no required withdrawals at…

A

73

35
Q

SIMPLE Plans

A

Low-cost plans for businesses with less than 100 employees

36
Q

SIMPLE plans include…

A

Matching and immediate vesting

37
Q

Transfer

A

Moving money from one plan to the same type of plan

38
Q

Transfers are generally not taxed because…

A

Money isn’t distributed to the taxpayer

39
Q

Rollover

A

Moving money from different types of plans

40
Q

Rollovers involve receipt of money by taxpayer and must be deposited into another qualified account within…

A

60 days to avoid taxes

IL Life and Health Insurance (29 decks)

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