Chapter 10- Retirement plans

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Conduit IRA

Which of the following can be used to avoid the mandatory withholding tax on qualified plan distributions?

The participating employee

Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?

make tax-deductible contributions to the plan

An employer that offers a qualified retirement plan (as opposed to a non-qualified plan) to its employees is eligible to


When funds are transferred directly from one IRA to another IRA, what percentage of the tax is withheld?

distribute a portion of company earnings to its employees

A qualified profit-sharing plan is designed to

HR 10 plan

What is another name for a Keogh plan?


ERISA requires that a Summary Plan Description must be provided to a new plan member within how many days following the new member’s eligibility date?

Exclusive benefit rule

An officer for a corporation takes out numerous unsecured loans from the company’s qualified retirement plan. Which of these rules is the plan in violation of?


First-time homebuyers are able to withdraw up to how much from their qualified IRAs without incurring the 10% early withdrawal penalty?


An individual working part-time has a gross income of $5,000 for the year. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?

More than 60% of plan assets are in key employee accounts

Which of the following is TRUE about a qualified retirement plan that is "top heavy"?

Survivor benefits can only be waived with the written consent of a married employee’s spouse

Which of these is a true statement regarding survivor benefits under a qualified retirement plan?

unlimited by dollar amount

In an individual retirement account (IRA), rollover contributions are

subject to a vesting schedule

Contributions made by an employee to a qualified retirement plan are required to be


Premature IRA distributions are subject to a penalty tax of

Income tax and penalty tax

Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?

If Tom’s employment is terminated, 20% of the funds could be forfeited

Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?

The account can be rolled into the surviving spouse’s IRA

Which of the following statements is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?

April 1st of the year following the year the participant attains age 70 1/2

Traditional individual retirement annuity (IRA) distributions must start by

10% penalty is applied to withdrawals prior to age 59 1/2

Which of these statements about traditional individual retirement accounts is accurate?

qualified retirement plan for the self employed

A Keogh plan is a(n)

20% is withheld for income taxes

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?

mandatory income tax withholding on the amount transferred

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid

Alienation of benefits

Tim is retired and has recently separated from his wife. He receives benefits from a qualified retirement plan through his former employer. The plan’s trustee has decided to split these benefit payments between Tim and his estranged wife. This decision is likely in violation of which IRS rule?

Received income tax-free

How are qualified Roth IRA distributions normally treated for tax purposes?


What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?

Distribution is subject to federal income tax withholding

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately had the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?


What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan?

An employee quits her job and receives $50,000 from her qualified plan

Which of the following situations would allow funds to be deposited into a rollover IRA?

Salary-deferral option

What does a 401(k) plan generally provide its participants?

church plans

An employee welfare plan exempt from ERISA regulations would be

60 days

The time limit an individual has to "rollover" funds from an IRA or qualified plan is

the marital deduction

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The transfer of Rick’s IRA account balance to his surviving spouse qualifies for


According to ERISA regulations, a Summary Plan Description must be provided to a new plan member within ___ days of the member’s eligibility date.

Annual return/report (Form 5500)

A description of a qualified plan’s insurance contract may be found in which ERISA reporting form?

Repossess the funds for business purposes

According to the IRS, a company may NOT do which of the following in regards to funds in a qualified retirement plan?

in favor of highly compensated employees

XYZ Corp has implemented a qualified retirement plan. This plan may NOT discriminate

Income taxes plus a 10% penalty tax on $30,000

A 55 year old recently received a $30,000 distribution from a previous employer’s 401k plan, minus $6,000 for income tax withholding. Which federal taxes apply if none of the funds were rolled over?

are restricted to maximum limits set by the IRS

In a qualified retirement plan, the yearly contributions to an employee’s account

church plans

An employee welfare plan exempt from ERISA regulations would be

seeking additional information requested by the insurance company

A life insurance producer’s underwriting duties may include

profit-sharing plan

A retirement plan that sets aside part of the company’s net income for distributions to qualified employees is called a

benefit a broad cross-section of employees

The IRS has a "minimum coverage" rule regarding qualified retirement plans. This rule states that each qualified plan is required to

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