Unit 11- Retirement Plans

Question 1

Are contributions tax deductible for QUALIFIED OR NONQUALIFIED PLANS?

Answer 1

QUALIFIED

Question 2

IRS must approve QUALIFIED/NONQUALIFIED PLANS?

Answer 2

QUALIFIED

Question 3

QUALIFIED/NONQUALIFIED plans may discriminate

Answer 3

NONQUALIFIED

Question 4

Tax on accumulation is deferred for QUALIFIED/NONQUALIFIED?

Answer 4

BOTH

Question 5

All withdrawals are taxed for QUALIFIED/NONQUALIFIED?

Answer 5

QUALIFIED

Question 6

All excess over cost base is taxes for QUALIFIED/ NONQUALIFIED

Answer 6

NONQUALIFIED

Question 7

QUALIFIED/NONQUALIFIED plans are a trust?

Answer 7

QUALIFIED

Question 8

Deferred Compensation Plans are QUALIFIED/NONQUALIFIED

Answer 8

NONQUALIFIED

Question 9

Payroll Deduction Plans are QUALIFIED/NONQUALIFIED?

Answer 9

NONQUALIFIED

Question 10

Are board members eligible for Deferred Compensation Plans?

Answer 10

No

Question 11

What is the difference between Payroll Deduction and 401(k) Plan?

Answer 11

401(k) plans are qualified and are pre-tax dollars

Question 12

IRA Contribution limit for under 50? 50 and over?

Answer 12

$5,500 and $6,500

Question 13

What is FDIC Insurance Amount on retirement accounts?

Answer 13

$250,000

Question 14

Can you hold margin accounts or options strategies in your IRA?

Answer 14

No

Question 15

Are annuities allowable as investments in IRAs?

Answer 15

Yes

Question 16

Are life insurance contracts allowable as investments in IRAs?

Answer 16

No

Question 17

Are munis allowable as investments in IRAs?

Answer 17

No

Question 18

At what age is there no penalty for distributions?

Answer 18

59 1/2

Question 19

At what age MUST distributions begin?

Answer 19

The year after the customer turns 70 1//2

Question 20

“RMD’

Answer 20

Required Minimum Distributions

Question 21

“RBD”

Answer 21

Required Beginning Date

Question 22

What is the penalty for distributions before 59 1/2?

Answer 22

10%

Question 23

What is the penalty if you have not taken distribution by the April 1st after the individual turns 70 1/2?

Answer 23

50% insufficient distribution penalty

Question 24

How many days must a rollover be completed in after withdrawal?

Answer 24

60 calendar days

Question 25

Difference between a rollover and a transfer

Answer 25

the Rollover- the individual takes possession of the funds, whereas the Transfer, the funds move from one custodian to another custodian

Question 26

How many rollovers can occur in a year?

Answer 26

Only One

Question 27

How many transfers can occur during a year?

Answer 27

unlimited

Question 28

Roth IRAs

Answer 28

IRAs that allow after-tax contributions

Question 29

Are contributions to ROTH IRAs deductible?

Answer 29

NO

Question 30

Is there a required minimum distribution at age 70 1/2?

Answer 30

No

Question 31

Re-characterization of a contribution

Answer 31

When a traditional IRA has been converted in to a ROTH IRA and the participant wishes to go back to the traditional IRA instead

Question 32

Can you convert and reconvert and amount during the same tax year?

Answer 32

No

Question 33

Coverdell IRA

Answer 33

Education IRA

Question 34

Are Coverdell's pretax or after tax?

Answer 34

after tax

Question 35

What is the max annual contribution to a Coverdell IRA

Answer 35

2,000 per student per year for children under 18

Question 36

Are Coverdell distributions taxed or tax free?

Answer 36

Tax Free

Question 37

Are contributions to 529 Plans pretax or aftertax?

Answer 37

after-tax

Question 38

Keogh Plans / HR-10 Plans

Answer 38

self-employed or owner-employees of unincorporated businesses

Question 39

Are Keogh Plans/HR-10 Plans qualified or nonqualified?

Answer 39

qualified

Question 40

Employees of self-employed are eligible for Keogh contributions if they meet 3 requirements

Answer 40

- works a least 1,000 hours in the year - completed one or more years of continuous employment - are at least 21 years of age

Question 41

Can IRAs or Keoghs hold cash-value life insurance contracts?

Answer 41

Keoghs

Question 42

What is the penalty for excess contributions to an IRA?

Answer 42

6%

Question 43

What is the penalty for excess contributions to a Keogh?

Answer 43

10%

Question 44

How are Keogh distributions taxed?

Answer 44

taxed as ordinary income

Question 45

How are ROTH 401 (k)s different from ROTH IRAs (2 reasons)

Answer 45

1) no income limitations on who may have such a plan | 2) account owner MUST begin withdrawals by 70 1/2

Question 46

ERISA- Employee Retirement Income Security Act

Answer 46

PARTICIPATION: all employees over 21 who have performed more than one year of service must be provided option to participate FUNDING: funds contributed to plan must be segregated from corporate assets VESTING: entitled to their entire retirement benefit within a certain number of years even if leave the company Communitication: Plan docs must be in writing, with annual statements of account Nondiscrimination: impartially treat employees Beneficiaries: must be names to receive an employee's benefits at death