retirement plans

Question 1

what are the two main types of retirement plans?

Answer 1

• qualified

- non-qualified

Question 2

what are the main types of qualified plans?

Answer 2

• IRAs
• roth IRAs
• simplified employee pensions
• keogh (hr-10) plans
• tax sheltered annuities
• SIMPLEs
• 401Ks

Question 3

irs approval is required for what kind of retirement plan?

Answer 3

qualified- irs approval required

non-qualified- irs approval not required

Question 4

tax contributions are deductible on what kind of retirement plan?

Answer 4

qualified- tax contributions deductible

non-qualified- not deductible

Question 5

describe discrimination on qualified and non-qualified retirement plans.

Answer 5

qualified- plan cannot discriminate

non-qualified- plan can discriminate

Question 6

describe taxes on withdrawals from qualified retirement plans.

Answer 6

all withdrawals are taxed

Question 7

describe taxes on withdrawals from non-qualified retirement plans.

Answer 7

only the excess over cost basis is taxed at time of withdrawal.

Question 8

describe trustees on qualified and non-qualified retirement plans

Answer 8

qualified- plan is setup with trustee

non-qualified- no plan trustee is required

Question 9

what is the allowable investment into an IRA per year?

Answer 9

$5,000

$6,500 if over 50 (catchup provision)

Question 10

describe allowable maximum in an IRA for working spouse and non-working spouse

Answer 10

2 accounts with $5,500 max each

Question 11

earning in an IRA grow..

Answer 11

tax deferred

Question 12

penalty on premature withdrawals in an IRA

Answer 12

10% penalty before age 59 1/2

Question 13

penalty on insufficient distribution in an IRA

Answer 13

50% penalty after age 70 1/2

Question 14

describe transfers from trustee to trustee of an IRA account

Answer 14

60 day min - no tax

Question 15

describe transfers from trustee to owner to trustee of an IRA account

Answer 15

60 day min - taxed

Question 16

what are some investment restrictions on an IRA account?

Answer 16

• no margin
• no short sales
• covered call options only
• no antiques or insurance
• no municipal bonds

Question 17

describe roth IRAs

Answer 17

• contributions after-tax dollars

- tax free withdrawals

Question 18

describe withdrawals on an roth IRA

Answer 18

• can withdraw tax free after funds have been in account for at least 5 years
• 59 1/2 or older

Question 19

describe a TSA (403B) plan

Answer 19

• plan for employees of public schools

- pretax dollars (taxed when received)

Question 20

describe a 501 (C)3 plan

Answer 20

• plant for employees of private non profit organizations

- pretax dollars (taxed when received)

Question 21

describe a keogh (HR-10) plan

Answer 21

-for self employed people

Question 22

max contribution on a keogh (HR-10) plan

Answer 22

-lesser of 100% of earnings or $53,000

Question 23

describe a 401K plan

Answer 23

• corporate plan for employees (benefits)
• based on profits
• tax on money when removed
• employer matching

Question 24

ERISA acronym

Answer 24

Employment retirement investment securities account

Question 25

describe the eligibility for an ERISA plan

Answer 25

• 21 years old
• 1 year min of employment
• full time (min 1,000 hrs per year)

Question 26

describe coverdell education savings account

Answer 26

• education IRA
• funded with after tax dollars
• withdrawals tax free for education expenses
• max contributions of $2,000/year

Question 27

describe a 529 plan

Answer 27

-savings account for college only
-withdrawals federally exempt
(taxed if student attends college out of state)