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HS326 Planning For Retirement Income > Chapter 9: IRAs and SEPs > Flashcards

Chapter 9: IRAs and SEPs Flashcards

1
Q

What advantage do SEPs have over IRAs?

A

greater funding limits

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2
Q

Traditional IRA contribution limit

A

6,500

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3
Q

Traditional IRA catch-up contribution

A

1,000

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4
Q

Traditional IRA contribution Income Phase-Out

A

Doesn’t have an income phaseout limit

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5
Q

Traditional IRA Deduction Phaseout for an Active Participant in the Plan.

A

Single: 73K - 83K
MFJ: 116K - 136K

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6
Q

Traditional IRA Deduction Phaseout when only one spouse is an Active Participant in the Plan.

A

218K - 228K

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7
Q

Traditional IRA Deduction Phaseout for an Inactive Participant in the Plan.

A

no limit

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8
Q

ROTH IRA Max Contribution amount

A

6,500

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9
Q

ROTH IRA Catch-Up contribution Limit

A

1,000

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10
Q

ROTH IRA Contribution Phaseout

A

Single: 138K - 153K
MFJ: 218K - 228K
MFS: 0 - 10K

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10
Q

ROTH IRA Deduction

A

NONE

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11
Q

SEP Contribution Limit

A

25% of income or $66,000

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12
Q

SEP Catchup contribution

A

NONE

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13
Q

SEP Contribution PhaseOut

A

NONE

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14
Q

SEP Deduction PhaseOut

A

NONE

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15
Q

SARSEP Contribution Limit

A

22,500

16
Q

SARSEP Catch-up Contribution Limit

A

7,500

17
Q

SARSEP Contribution Phaseout

A

NONE

18
Q

SARSEP Deduction PhaseOut

A

NONE

19
Q

What advantages are lost when a Qualified plan is rolled over to a IRA plan?

A

Lump-Sum Distribution Taxation Options:
1. 10-year forwarding
2. pre-1974 capital gain treatment
3. Net Unrealized Appreciation

Loans Not Permitted in IRAs

20
Q

What is the Minimum Distribution Rules for Traditional IRAs?

A

Required Minimum Distributions during life.

After death, 10-year rule

21
Q

What is the Minimum Distribution Rules for ROTH IRAs?

A

No Required Minimum Distribution During Life.

After death, 10-year rule.

22
Q

What is the excise tax for contributions in excess of the limit?

A

6%. Excise tax can be avoided by withdrawing the excess contributions before April 15, tax day.

23
Q

what does being an Active Participant in an employer-sponsored plan limit?

A

It limits the deductibility of traditional IRA contributions.

24
Q

At what MAGI does the Saver’s Credit (AKA Retirement Savings Contributions Credit) phaseOut?

A

Single: 36,500
MFJ: 73,000

25
Q

What is the maximum credit that can be earned through the Saver’s Credit (AKA Retirement Savings Contributions Credit) ?

A

1,000 per person each year or
2,000 per year for MFJ.

26
Q

What does the Back-Door ROTH enable?

A

Permits taxpayers that have income in excess of the annual contribution limits to fund ROTH IRAs

27
Q

When does the Back-Door ROTH not work?

A

when the employee also has other IRA accounts/balances. Only works with the employee has NO OTHER IRA accounts.

If employee DOES have other IRA accounts, the basis is prorated over all IRA balances.

28
Q

SEP Eligibility Rules

A

age 21 or older.
worked for 3 of last 5 years
received compensation of at least $750 during the year.

29
Q

Employer Funded SEP contributions

A

Must be made to all living, dead, and no longer employed employees for the years.

30
Q

Contribution of Employer Funded SEPs are limited to

A

the lesser of
25% an employees covered compensation
OR
66K

Permitted Disparity Accepted.

31
Q

SEP Vesting

A

100% vested at all times.

32
Q

Rules for Qualified Distributions

A

account must be atleast 5 years old

owner must be 59 1/2 years old at time of withdrawal

Expections:
Death, Disability, First Home purchase up to 10K.

33
Q

Exceptions to the 10% penalty for early qualified withdrawals. (11)

A
  1. Death
  2. Disability
  3. Medical Expenses in excess of 7.5% AGI
  4. Higher Education
  5. Unemployed paying health insurance premiums.
  6. child birth or adoption - up to 5,000 in year of birth or adoption.
  7. age 591/2+
  8. Substantially Equal Periodic Payments
  9. IRS Levy
  10. First-Time Home Purchase up to 10K
  11. Distributions for military reserve called to active duty.
34
Q

saver’s credit

A

AKA retirement savings contribution credit.

built to encourage low income to save for retirement.

Saver’s Credit income phaseout threshold is:
Single : 36,500
MFJ : 73,000

HS326 Planning For Retirement Income (9 decks)

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