Unit 11 - Retirement Plans

Question 1

What CAN’T IRA funds be invested in?

Answer 1

• Life Insurance
• Collectibles - artwork, antiques, stamps, coin collections
• Hard assets - precious gems and metals in bullion form

Question 2

What CAN IRA funds be invested in?

Answer 2

• Flexible premium annuities
• Bank accounts
• Brokerage accounts
• Mutual funds

Question 3

What is the maximum amount an employer may contribute to a profit-sharing plan?

Answer 3

As a whole is limited to 25% of the company’s payroll for all employees.

Question 4

Keogh Plans / HR-10 Plans

Answer 4

Qualified retirement plans set up by self-employed persons and non-incorporated businesses such as sole proprietorships (individuals) and partnerships.

Question 5

Simplified Employee Pension (SEP)

Answer 5

Annual employer contributions may not exceed 25% of the employee’s compensation up to a specified maximum contribution amount.
Employees must be immediately 100% vested in employer contributions.

Question 6

Savings Incentive Match Plans for Employees (SIMPLEs)

Answer 6

Simplified retirement plan for small employers with 100 or fewer employees and not other type of retirement plan.

• Employers are required to match employee contributions dollar-for-dollar for at least 1% and up to 3%.
• Employees earning $5,000+ annually must be allowed to participate in the plan.
• Employees are 100% vested in employer contributions.
• 25% tax penalty on premature distributions, during the first 2 years and standard 10% penalty after.