Retirement Plans

Question 1

This is an individual qualified retirement account through which an eligible individual can accumulate tax-deferred income up to a certain amount each year, depending on the individual’s tax bracket.

Answer 1

Traditional IRA

Question 2

This is a type of qualified retirement plan under which the employer contributes to an individual retirement account that’s established and maintained by the employee.

Answer 2

Simplified Employee Pension (SEP) Plan

Question 3

This is a qualified, tax-favored, employer retirement plan that a small employer (lesson than 100 employees) can make available to its employees.

Answer 3

Savings Incentive Match Plan for Employees (SIMPLE)

Question 4

This is an individual retirement account (IRA) which allows a person to contribute after-tax funds up to a specified amount each year. Both the earnings generated in the account and withdrawals taken after the age of 59 1/2 are tax-free.

Answer 4

Roth IRA

Question 5

This is when an individual retirement account (IRA) is established with funds that are transferred from another IRA or qualified retirement plan which the owner had terminated.

Answer 5

Rollovers

Question 6

This is the tax-free distribution of earnings from a Roth IRA. To be considered a qualified withdrawal, the funds must have been held in the account for a minimum of five years. No portion of the withdrawal is subject to tax if it’s taken for one of the following reasons: permanent disability, made by a beneficiary after the owner’s death; or used to buy, build, or rebuild a first home ($10,000 lifetime limit).

Answer 6

Qualified Withdrawal

Question 7

This is a retirement or employee compensation plan which is established and maintained by an employer that meets specific guidelines as determined by the IRS and consequently receives favorable tax treatment.

Answer 7

Qualified Plan

Question 8

This is a plan in which a portion of a company’s profits is set aside for distribution to employees who qualify under the plan.

Answer 8

Profit-Sharing Plan

Question 9

If the amount being withdrawn from a plan exceeds the total amount contributed, it’s considered a non-qualified withdrawal. The earnings generated after the contributions become taxable as ordinary income.

Answer 9

Non-Qualified Withdrawal

Question 10

This is a plan that’s designed to fund the retirement of self-employed individuals. The name is derived from the author of the Keogh Act (HR-10). Contributions that are made to such a plan are given favorable tax treatment.

Answer 10

Keogh Plan

Question 11

This is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.

Answer 11

Employee Retirement Income Security Act of 1974 (ERISA)

Question 12

This is a tax-qualified retirement plan in which annual contributions are determined by a formula that’s established in the plan. Benefits which are paid to a participant will vary with the amount of contributions made on the participant’s behalf and the length of service under the plan.

Answer 12

Defined Contribution Plan

Question 13

This is a pension plan under which a specific benefit formula determines the benefits.

Answer 13

Defined Benefit Plan

Question 14

This is a retirement plan for certain employees of public schools, employees of specific tax-exempt organizations, and certain religious organizations.

Answer 14

403(b) Plan

Question 15

This is a retirement savings plan that’s sponsored by an employer. The plan allows an employee to save and invest a piece of her paycheck before taxes are taken out. Taxes are not paid until the money is withdrawn from the account.

Answer 15

401(k) Plan