Retirement Plans – Lesson 11

Question 0

Only nonqualified plans must have vesting rules approved by the internal revenue service. True or false?

Answer 0

False

Question 1

What federal act passed in 1974 to protect participants of retirement plans?

Answer 1

Employee retirement income security act (ERISA).

Question 2

What is an Employee stock ownership plan (ESOP)?

Answer 2

1. A qualified employee benefit plan

2. Gives employee part ownership in the company

Question 3

Tax-sheltered annuities are employer – sponsored pension plans for employees of nonprofit organizations. True or false?

Answer 3

True

Question 4

The entitlement of a pension plan participant to receive benefits from a retirement plan is called the:

Answer 4

Vesting schedule

Question 5

What is true about qualified plans?

Answer 5

1. Contribution made on behalf of the employee is not a taxable income to the employee in that year.
2. Qualified plan grow on tax-deferred basis.
3. Employer contributions to a qualified plan is deductible business expenses for the employer.

Question 6

What is an educational IRA?

Answer 6

1. Savings mechanism for future educational expenses.
2. Contributions are not tax deductible.
3. Also known as a Coverdell educational savings account or ESA

Question 7

A person who receives a distribution from a qualified plan and wants to reinvest the funds in another tax-deferred account can reinvest those funds in an IRA. True or false?

Answer 7

True

Question 8

In regards to IRAs; require forfeiture of any remaining funds in the account upon death of the owner. True or false?

Answer 8

False

Question 9

IRAs grow tax deferred. True or false?

Answer 9

False

Question 10

An IRA can be established by anyone under what age who has earned income?

Answer 10

70 1/2

Question 11

The two major categories of qualified employer retirement plans are:

Answer 11

1. Defined contribution

2. Defined benefit

Question 12

Federal employees and members of the uniformed services have the opportunity to participate in what type of plan?

Answer 12

Thrift savings plan (TSP)

Question 13

In an ESOP, the company contributions to the trust are tax-deductible within certain limits. True or false?

Answer 13

True

Question 14

An IRA owner needs to start receiving distributions no later than when?

Answer 14

April 15 following the year in which the age of 70 1/2 is attained.

Question 15

Roth IRA contributions are not tax-deductible; the earnings in Roth IRA accumulate tax-free. True or false?

Answer 15

True

Question 16

Generally the earnings and Roth IRAs can be withdrawn on a tax-free basis. True or false?

Answer 16

True

Question 17

In order to receive the distribution from an IRA tax-free, the account owner must be at least how old and the funds had to be held in the account for how long?

Answer 17

1. 59 1/2 years old

2. Five years

Question 18

Rollovers between IRAs can be made only ones in how long?

Answer 18

Once in a 12 month period.

Question 19

What is the limit for an educational IRA?

Answer 19

$2000 annually