Question 1

An employer may contribute to an employee's traditional 401(k) account but the employer may not contribute to an employee's Roth 401(k) account.

Accepted Answer

A) True 
 B)False

Question 2

Dean has earned $70,000 annually for the past five years working as an architect for MWC Inc.Under MWC's defined benefit plan (which uses a 7-year graded vesting schedule)  employees earn a benefit equal to 3.5% of the average of their three highest annual salaries for every full year of service with MWC.Dean has worked for five full years for MWC and his vesting percentage is 60%.What is Dean's vested benefit (or annual retirement benefit he has earned so far)  ?

Accepted Answer

A)  $12,250
B)  $42,000
C)  $7,350
D)  $0E) A) and B)
F) A) and C)

Question 3

Which of the following statements regarding traditional IRAs is true?

Accepted Answer

A)  Once a taxpayer reaches age 55 years of age she is allowed to contribute an additional $1,000 a year.
B)  Taxpayers with high income are not allowed to contribute to traditional IRAs.
C)  Taxpayers who participate in an employer-sponsored retirement plan are allowed to deduct contributions to a traditional IRA regardless of their AGI.
D)  A single taxpayer with no earned income is not allowed to deduct contributions to traditional IRAs.The limit for deductible contributions to traditional IRAs is the lesser of $5,500 or earned income.A taxpayer with no earned income would not be allowed to make a deductible contribution to an IRA.E) B) and C)
F) All of the above

Question 4

Taxpayers who participate in an employer-sponsored retirement plan are not allowed to contribute to individual retirement accounts (IRAs) .

Accepted Answer

A) True 
 B)False

Question 5

Shauna received a distribution from her 401(k)  account this year.In which of the following situations will Shauna be subject to an early distribution penalty?

Accepted Answer

A)  Shauna is 60 years of age but not yet retired when she receives the distribution.
B)  Shauna is 58 years of age but not yet retired when she receives the distribution.
C)  Shauna is 56 years of age and retired when she receives the distribution.
D)  Shauna is 69 years of age but not yet retired when she receives the distribution.Taxpayers are subject to an early distribution penalty if they receive a distribution before they reach 59½ and are not retired,or have retired but not reached 55 years of age.E) A) and C)
F) B) and C)

Question 6

Kathy is 48 years of age and self-employed.During the year she reported $100,000 of revenues and $40,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k)  ?

Accepted Answer

A)  $11,152
B)  $16,652
C)  $28,652
D)  $51,000E) A) and C)
F) B) and D)

Question 7

Both employers and employees may contribute to defined contribution plans.However,the amount that employees may contribute to the plan in a given year is limited by the tax law while the amount that employers may contribute is not.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements regarding vesting in a defined benefit plan is correct?

Accepted Answer

A)  Under a cliff vesting schedule,a portion of an employee's benefits vest each year.
B)  Under a graded vesting schedule,an employee's entire benefit vests all at the same time.
C)  When an employee's benefits vest,she is entitled to participate in the employer's defined benefit plan.
D)  When an employee's benefits vest,she is legally entitled to receive the benefits.To vest in a benefit means to be legally entitled to receive it.E) All of the above
F) None of the above

Question 9

Jacob participates in his employer's defined benefit plan.He has worked for his employer for four full years.If his employer uses a five-year cliff vesting schedule,Jacob will need to work another year in order to vest in any of his defined benefit plan retirement benefits.

Accepted Answer

A) True 
 B)False

Question 10

Taxpayers never pay tax on the earnings of a traditional 401(k) account.

Accepted Answer

A) True 
 B)False

Question 11

Shauna received a $100,000 distribution from her 401(k)  account this year.Assuming Shauna's marginal tax rate is 25%,what is the total amount of tax and penalty Shauna will be required to pay if she receives the distribution on her 59th birthday and she has not yet retired?

Accepted Answer

A)  $0.
B)  $10,000.
C)  $25,000.
D)  $35,000.
E)  None of thesE.She must pay $25,000 of income tax on the distribution and a 10% early distribution penalty because she was not 59½ on the date of the distribution and she had not yet retired.F) C) and D)
G) D) and E)

Question 12

Lisa,age 45,needed some cash so she received a $50,000 distribution from her Roth IRA.At the time of the distribution,the balance in the Roth IRA was $200,000.Lisa established the Roth IRA 10 years ago.Over the years,she has contributed $20,000 to her account.What amount of the distribution is taxable and subject to early distribution penalty?

Accepted Answer

A)  $0
B)  $5,000
C)  $30,000
D)  $50,000E) All of the above
F) None of the above

Question 13

Which of the following statements regarding IRAs is false?

Accepted Answer

A)  Taxpayers who participate in an employer-sponsored retirement plan may be allowed to make deductible contributions to a traditional IRA.
B)  The ability to make deductible contributions to a traditional IRA and nondeductible contributions to a Roth IRA may be subject to phase-out based on AGI.
C)  A taxpayer may contribute to a traditional IRA in 2014 but deduct the contribution in 2013.
D)  Taxpayers who have made nondeductible contributions to a traditional IRA are taxed on the full proceeds when they receive distributions from the IRA.If taxpayers make nondeductible contributions to a traditional IRA,they are taxed on only a portion of any distributions received.That is,the distribution is split into an income portion and a nontaxable return of capital portion.E) C) and D)
F) B) and C)

Question 14

Sean (age 74 at end of 2012) retired five years ago.The balance in his 401(k) account on December 31,2012 was $1,700,000 and the balance in his account on December 31,2013 was $1,800,000.Using the IRS tables below,what is Sean's required minimum distribution for 2013?

Accepted Answer

For 2013,his require...

Question 15

Which of the following statements regarding contributions to defined contribution plans is true?

Accepted Answer

A)  Employer contributions to a defined contribution plan are not limited by the tax law.
B)  Employee contributions to a defined contribution plan are not limited by the tax law.
C)  An employee who is at least 60 years of age as of the end of the year may contribute more to a defined contribution plan than an employee who has not reached age 60 by year end.
D)  The tax laws limit the sum of the employer and employee contributions to a defined contribution plan.The sum of employer and employee contributions is limited by the tax law.The limit is indexed for inflation.E) None of the above
F) A) and C)

Exam 13: Retirement Savings and Deferred Compensation

Correct Answer
verified

Which of the following statements regarding contributions to defined contribution plans is true?

Correct Answer
verified

Taxpayers who participate in an employer-sponsored retirement plan are not allowed to contribute to individual retirement accounts (IRAs) .

Correct Answer
verified

Which of the following statements regarding traditional IRAs is true?

Correct Answer
verified

Jacob participates in his employer's defined benefit plan.He has worked for his employer for four full years.If his employer uses a five-year cliff vesting schedule,Jacob will need to work another year in order to vest in any of his defined benefit plan retirement benefits.

Correct Answer
verified

Both employers and employees may contribute to defined contribution plans.However,the amount that employees may contribute to the plan in a given year is limited by the tax law while the amount that employers may contribute is not.

Correct Answer
verified

Correct Answer
verified

Shauna received a $100,000 distribution from her 401(k) account this year.Assuming Shauna's marginal tax rate is 25%,what is the total amount of tax and penalty Shauna will be required to pay if she receives the distribution on her 59^th birthday and she has not yet retired?

Correct Answer
verified

Shauna received a distribution from her 401(k) account this year.In which of the following situations will Shauna be subject to an early distribution penalty?

Correct Answer
verified

Sean (age 74 at end of 2012) retired five years ago.The balance in his 401(k) account on December 31,2012 was $1,700,000 and the balance in his account on December 31,2013 was $1,800,000.Using the IRS tables below,what is Sean's required minimum distribution for 2013?

Correct Answer
verified
For 2013,his require...
View Answer

Which of the following statements regarding IRAs is false?

Correct Answer
verified

Which of the following statements regarding vesting in a defined benefit plan is correct?

Correct Answer
verified

An employer may contribute to an employee's traditional 401(k) account but the employer may not contribute to an employee's Roth 401(k) account.

Correct Answer
verified

Kathy is 48 years of age and self-employed.During the year she reported $100,000 of revenues and $40,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k) ?

Correct Answer
verified

Taxpayers never pay tax on the earnings of a traditional 401(k) account.

Correct Answer
verified

Exam 13: Retirement Savings and Deferred Compensation

Correct AnswerverifiedShow Answer

Which of the following statements regarding contributions to defined contribution plans is true?

Correct AnswerverifiedShow Answer

Taxpayers who participate in an employer-sponsored retirement plan are not allowed to contribute to individual retirement accounts (IRAs) .

Correct AnswerverifiedShow Answer

Which of the following statements regarding traditional IRAs is true?

Correct AnswerverifiedShow Answer

Jacob participates in his employer's defined benefit plan.He has worked for his employer for four full years.If his employer uses a five-year cliff vesting schedule,Jacob will need to work another year in order to vest in any of his defined benefit plan retirement benefits.

Correct AnswerverifiedShow Answer

Both employers and employees may contribute to defined contribution plans.However,the amount that employees may contribute to the plan in a given year is limited by the tax law while the amount that employers may contribute is not.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Shauna received a $100,000 distribution from her 401(k) account this year.Assuming Shauna's marginal tax rate is 25%,what is the total amount of tax and penalty Shauna will be required to pay if she receives the distribution on her 59th birthday and she has not yet retired?

Correct AnswerverifiedShow Answer

Shauna received a distribution from her 401(k) account this year.In which of the following situations will Shauna be subject to an early distribution penalty?

Correct AnswerverifiedShow Answer

Sean (age 74 at end of 2012) retired five years ago.The balance in his 401(k) account on December 31,2012 was $1,700,000 and the balance in his account on December 31,2013 was $1,800,000.Using the IRS tables below,what is Sean's required minimum distribution for 2013?

Correct AnswerverifiedFor 2013,his require...View AnswerShow Answer

Which of the following statements regarding IRAs is false?

Correct AnswerverifiedShow Answer

Which of the following statements regarding vesting in a defined benefit plan is correct?

Correct AnswerverifiedShow Answer

An employer may contribute to an employee's traditional 401(k) account but the employer may not contribute to an employee's Roth 401(k) account.

Correct AnswerverifiedShow Answer

Kathy is 48 years of age and self-employed.During the year she reported $100,000 of revenues and $40,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k) ?

Correct AnswerverifiedShow Answer

Taxpayers never pay tax on the earnings of a traditional 401(k) account.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Shauna received a $100,000 distribution from her 401(k) account this year.Assuming Shauna's marginal tax rate is 25%,what is the total amount of tax and penalty Shauna will be required to pay if she receives the distribution on her 59^th birthday and she has not yet retired?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
For 2013,his require...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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