Retirement Plans

Question 1

Retirement or employee compensation plan established and maintained by an employer that meets specific guidelines spelled out by the IRS and consequently receives favorable tax treatment

Answer 1

Qualified Plan

Question 2

Federal law that sets minimum standards for most voluntary established pension and health plans in private industries to provide protection for individuals in these plans

Answer 2

ERISA (Employee Retirement Income Security Act of 1974)

Question 3

Tax-qualified retirement plan in which annual contributions are determined by a formula set forth in the plan. Benefits paid vary in the contributions made on the participants behalf and the length of service under the plan.

Answer 3

Defined Contribution Plan

Question 4

Any plan whereby a portion of a company’s profit is set aside for distribution to employees who qualify under the plan

Answer 4

Profit Sharing Plans

Question 5

Pension plans under which benefits are determined by a specific benefit formula

Answer 5

Defined Benefit Plans

Question 6

Retirement savings plan sponsored by an employer that lets worker save and invest a price of their paycheck before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account.

Answer 6

401(k) Plans

Question 7

Retirement plan for certain employees of public schools, employees of certain tax-exempt organizations, and certain ministers

Answer 7

403(b) Plans

Question 8

Designed to fund retirement of self-employed individuals

Answer 8

Keogh Plans

Question 9

Qualified retirement plan under which the employer contributes to an individual retirement account set up and maintained by the employees

Answer 9

Simplified Employee Pension (SEP)

Question 10

Qualified employer retirement plan that allows small employers to set up a tax-favored retirement savings plan for their employees

Answer 10

SIMPLE

Question 11

Personal qualified retirement account through which eligible individuals accumulate tax-deferred income up to a certain amount each year, depending on the persons tax bracket

Withdrawals must start no later than April 1 following the year in which the participant turns 70.5. Specifies minimum amounts each year that need to be withdrawn.

If withdrawn prior to 59.5, a 10% excuse tax with be issued

Answer 11

Traditional IRA

Question 12

Individual retirement account allowing a person to set aside after-tax income up to a specified amount each year. There are no age limits. Distributions are not mandatory and can therefore be inherited and passed down through generations.

Earning and withdrawals are tax-free after 59.5.

Answer 12

Roth IRA

Question 13

Individual retirement account established with funds transferred from another IRA or qualified retirement plan that the owner had terminated

Answer 13

Rollover