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Series 62 > Retirement > Flashcards

Flashcards in Retirement Deck (14):

What standards must retirement plans reach to have beneficial tax status?

Be a Qualified Plan meeting ERISA


Two types of nonqualified plan?

Payroll deduction plans and Deferred Compensation


Corporate pension plans, profit-sharing plans, IRAs and Keogh plans are all types of...

Qualified plans.


What's the maximum contribution to an IRA?

Max of $5,500 or total earned income for the year.
For 50+ they can catch up with additional $1k/year.
No contributions after 70 1/2


Married couples and IRAs...

Separate accounts. Working person may deposit non-working spouse's contribution for them.


Withdrawals from an IRA...

- Without penalty, begin at 59.5; must start at 70.5
- Premature withdrawal subject to 10% penalty and amount included on tax return
- Early withdrawal without penalty allowable under certain circumstances (health)


What's a Roth IRA?

- Contributions not deductible
- Qualified distributions are tax free
- eligibility phased out for high earners


Keogh HR10 plans cover who?

Contribute to lower of $51k or annual compensation.
Deductible contributions are lower of 20% of compensation or $51k.


How are distributions from a Keogh plan taxed?

As ordinary income.
Non-deductible contributions are not taxed when distributed.


What's a 529 plan?

Savings vehicle for future higher education expenses.
Contributions after tax.
Qualified withdrawals for HE are tax free.


Tax rules on gifting?

Tax free gift to any one person in one year capped at $14k.
Initial gift of $70k allowed into 529 plan – treated as if made over a five year period.


What's a rollover?

If you get a lump sum distribution from a qualified retirement plan – can be rolled over to an IRA within 60 days without any tax liability.


Restrictions on contributions to Roth IRA?

- no upper age limit
- retirement benefits and investment income not eligible
- max of 100% earned income or $6,500 (limit plus $1k catchup)


How is rental income treated when calculating pension contributions?

It is NOT considered earned income and can't be contributed to an IRA