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Terms in this set (31)An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction? 20% is withheld for income taxes A plan sponsor must withhold 20% of the distribution in federal taxes on a rollover. Once the rollover takes place to a new custodian, the remainder of the distribution is made. Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company? Annuity How are Roth IRA distributions normally taxed? Distributions are received tax-free
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age? Traditional Individual Retirement Account (IRA) withdrawals are normally subject to a tax penalty if they are made before the owner reaches age 59 1/2. *A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid Mandatory income tax withholding on the transfer amount. There is no federal tax withholding involved in a transfer of funds from one qualified plan into another. Rollovers, however, involve a 20% withholding. Once the rollover takes place to the new custodian, the remainder of the distribution is made. Traditional individual retirement annuity (IRA) distributions must start by Distributions from a traditional IRA must be made by April 1 following the year the participant turns age 70 1/2 or an excise tax will be assessed. *In a qualified retirement plan, the yearly contributions to an employee's account Are restricted to maximum levels set by the IRS Annual limits to an employee's qualified retirement plan are based on maximum limits set by the IRS. *Which of the following is TRUE about a qualified retirement that is "top heavy"? More than 60% of plan assets are in key employee accounts A plan is considered to be top heavy if more than 60% of plan assets are attributable to "key employees" as of the last day of the prior plan year. *At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan. The IRS says that withdrawals of funds from a profit sharing plan may be subject to a 10% tax penalty in addition to income taxes if they are made before the age of 59 1/2. This same early withdrawal penalty applies to funds taken out of 401k plans and traditional individual retirement accounts.
When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld? None. There is no tax withheld on an IRA transfer. A qualified profit-sharing plan is designed to... allow employees to participate in the profits of the company. One of the purposes of a qualified profit-sharing plan is to distribute a portion of company earnings to employees. 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 has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee? Distribution is subject to federal income tax withholding. A participant must complete a rollover to another qualified plan within 60 days or the distribution is considered a nonqualified distribution and is subject to taxes and penalties. A plan sponsor must withhold 20% of the distribution for federal taxes on a rollover. Once the rollover takes place to the new custodian, the remainder of the distribution is released. How long does an individual have to "rollover" funds from an IRA or qualified plan? 60 days In IRA's and qualified plans, the time limit for rollover funds is 60 days, or the funds could be subjected to income taxes and a penalty tax. All of the following statements about traditional individual retirement accounts are false EXCEPT: 10% penalty is applied to withdrawals before age 59 1/2. Because an IRA is a qualified plan, it has the same rules for early withdrawal. Which of these retirement plans can be started by an employee, even if another plan is in existence? Individual Retirement Account (IRA) An IRA may be established by an employee, regardless of any other retirement plan. *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? 50% Distributions must be made by April 1 following the year the participant turns age 70 1/2 or a 50% excise tax will be assessed on the amount that should have been withdrawn. *Who is normally considered to be the owner of a 403(b) tax-sheltered annuity? The employee The participating employee normally applies for and owns a 403(b) tax-sheltered annuity. A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over? Income taxes plus a 10% penalty tax on $30,000 All withdrawals from a qualified retirement plan are taxable as current income. In addition, any withdrawals made before age 59 1/2 is subject to an additional tax penalty of 10% of the amount withdrawn. *Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? The correct answer is "If Tom's employment is terminated, 20% of the funds would be forfeited". In this situation, 80% "vested" means that 20% of the funds could be forfeited if Tom's employment is terminated. In an individual retirement account (IRA), rollover contributions are The account can be rolled into the surviving spouse's IRA A surviving spouse who inherits IRA benefits or benefits from the deceased spouse's qualified plan is eligible to establish a rollover IRA in the surviving spouse's own name. Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made? Profit-sharing plan Profit-sharing plans set aside a portion of a company's net income for distributions to qualified employees. A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a Marital deduction The transfer of a decedent's IRA account balance to a surviving spouse qualifies for the Unlimited Marital Deduction, which generally exempts the transfer from estate taxes. What does a 401(k) plan generally provide its participants? Salary-deferral contributions A 401(k) plan normally provides participants with a salary-deferral option for contributions to the plan. 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? 100 An employer can have a maximum of 100 employees earning at least $5,000 to be eligible for a SIMPLE retirement plan. Which plan is intended to be used by a sole proprietor and the employees of that business? The correct answer is "Keogh Plan". A Keogh Plan may be used by a sole proprietor only if the employees of the business are included. *Post-tax dollar contributions are found in Roth IRA investments No income tax deductions can be taken for contributions made to a Roth, but the earnings on those contributions are entirely tax-free when they are withdrawn. *Premature IRA distributions are assessed a penalty tax of
10% Premature distributions from an IRA are subject to a 10% penalty tax. An employer that offers a qualified retirement plan to its employees is eligible to Make tax-deductible contributions to the plan The advantage gained by providing a qualified retirement plan is the employer's contributions to the plan are tax deductible. What type of employee welfare plans are not subject to ERISA regulations? Church plans *Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2? Ordinary income tax and a 10% tax penalty for early withdrawal. An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable? $25,000 Students also viewedXCEL Chapter 1017 terms st538812 Chapter 11: Uses of Life Insurance14 terms julianntruonggPlus Retirement Plans Exam Review27 terms shawn_weaks 9 - Retirement Plans32 terms N_Ritchie Other sets by this creatorSocial Security8 terms brooke_rick_mcdonald Annuities27 terms brooke_rick_mcdonald Group Life Insurance14 terms brooke_rick_mcdonald Life Insurance Underwriting & Policy Issue41 terms brooke_rick_mcdonald Verified questions
algebra Use the Penders' expense summary in the previous figure to answer the following questions. How much more or less did the Penders spend for all fixed expenses than the amount budgeted? Verified answer
economics Alie is outraged when she hears that a company is offering insurance against being attacked by zombies: "Zombies aren't even real! This company is just taking advantage of people." Without acknowledging the possible existence of zombies, provide an alternative perspective on the insurance company's ethics. Verified answer
politics of the united states Read each of the following situations and decide whether a contract has been made. Give your reasons. Liz offers Sharon $\$ 100$ to steal four hubcaps for her new sports car. Sharon steals the hubcaps from a car dealership, brings them to Liz, and asks for the money. Verified answer
finance Mosaic Company applies overhead using machine hours and reports the following information. Actual machine hours used 4,700 hours Standard machine hours (for actual production) 5,000 hours Actual variable overhead rate per hour $4.15 Standard variable overhead rate per hour$4.00 Compute the variable overhead spending variance and the variable overhead efficiency variance and classify each as favorable or unfavorable. Verified answer Other Quizlet setsMythology Exam 2 (9/9/19-10/7/19)78 terms SJNDQ7 discrimination39 terms r6468t Review vocab39 terms gormleyhannah Which of the following describes the tax advantage of a qualified retirement plan?Which of the following describes the tax advantage of a qualified retirement plan? The earnings in the plan accumulate tax deferred.
What does a 401k plan generally provide as participants?When participants are eligible to receive a distribution, 401(k) plans typically provide that participants can elect to: ∎ Take a lump sum distribution of their account, ∎ Roll over their account to an IRA or another employer's retirement plan, or ∎ Take periodic distributions.
Under which type of IRA can investors contribute with after tax assets and withdrawals are usually untaxed?With a Roth IRA, you contribute after-tax dollars, your money grows tax-free, and you can generally make tax- and penalty-free withdrawals after age 59½. With a Traditional IRA, you contribute pre- or after-tax dollars, your money grows tax-deferred, and withdrawals are taxed as current income after age 59½.
Which tax would an IRA participant to be subjected to on distributions received prior to age?Generally, the amounts an individual withdraws from an IRA or retirement plan before reaching age 59½ are called ”early” or ”premature” distributions. Individuals must pay an additional 10% early withdrawal tax unless an exception applies.
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Which of the following is true about a qualified retirement that is top heavy quizlet?
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