Flashcards in Ch 7 Deck (14):
Who funds the benefits under Social Security and the Railroad Retirement Act?
Employees and employers
How are distributions from a traditional IRA taxed?
How did the stock market crash in 1929 contribute to the growth of private pensions?
Corporations received enhanced tax breaks for contributing to them.
What percentage of a pension plan can be invested in company stock?
Some 401K plans let employees allocate elective deferrals to a Roth 401K. What is the income tax treatment?
Deferrals are included in income and qualified distributions are entirely tax free.
What is the age limit for contributing to a traditional IRA?
Are there required distributions under a Roth?
Who can get SS Survivor benefits?
If currently insured (or fully):
-Dependent, unmarried children
-Spouse or ex-spouse caring for children
Only if fully insured:
-Spouse age 60 or over
-Dependent parent age 62 or older
If someone's full SS retirement age is 66 and they wait for years to retire, what is the benefit?
32% more benefit, permanently (8%/yr)
What if someone whose full retirement age is 66 retires at 62?
5/9% 36 months = 20
5/12% 12 months = 5
Are defined benefit plans expensive to administer?
No. The administration, reporting, and disclosure agreements are minimal and inexpensive
This type of defined benefit plan has a benefit that is more like a defined contribution plan.
Cash balance plan.
This type of plan closely resembles an IRA.