Retirement plans

Question 1

Are qualified retirement plans set up with a trustee?

Answer 1

Yes

Qualified plans have a plan trustee

Question 2

Do non-qualified retirement plans have to have a plan trustee?

Answer 2

No

No plan trustee required

Question 3

Are contributions to qualified retirement plans tax deductible?

Answer 3

Yes, tax deductible

Also, tax on accumulation is deferred but taxes are due upon withdrawal

(Non qualified contributions are not tax deductible)

Question 4

Are contributions to non qualified retirement plans tax deductible?

Answer 4

No
Not tax deductible

(But contributions to qualified plans are deductible)

Question 5

Are withdrawals from qualified retirement plans taxed?

Answer 5

Yes, all withdrawals are taxed

Question 6

For a non qualified retirement plan, can the taxes on accumulation be deferred?

Answer 6

Tax on accumulation may be deferred but that’s not always the case

Question 7

Can non qualified retirement plans discriminate (only allow certain employees to participate)

Answer 7

Yes, can discriminate

Qualified plans aren’t allowed to discriminate

Question 8

How are withdrawals from a non-qualified plans taxed?

Answer 8

At the time of withdrawal, only excess over cost basis is taxed

(Remember, contributions to non qualified plans are not tax deductible)

Question 9

4 kinds of qualified retirement plans

Answer 9

• SEP
• Tax shelters annuities, both 403(b) and 501(c)(3)
• Savings incentive match plan for employees (SIMPLEs)
• 401(k)s, traditional and Roth

Contributions tax deductible

Question 10

Are contributions to SIMPLE plans tax deductible?

Answer 10

Yes

They are qualified plans therefore contributions tax deductible

Question 11

Are contributions to deferred compensation plans tax deductible?

Answer 11

No

Deferred compensation plans are non qualified so contributions aren’t deductible

Question 12

3 types of non qualified retirement plans

Answer 12

1. Payroll deduction
2. Deferred compensation
3. Section 457 plans (type of deferred compensation plan, mostly for government employees)

Question 13

T/F: Section 457 plans are a type of deferred compensation plan offered mostly to gov employees and some non profits

Answer 13

True

Section 457 plans are also non qualified

Question 14

4 types of retirement plans that have tax deductible contributions

Answer 14

• SEP
• Tax shelters annuities, both 403(b) and 501(c)(3)
• Savings incentive match plan for employees (SIMPLEs)
• 401(k)s, traditional and Roth

They’re qualified plans