FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 13: Retirement Savings and Deferred Compensation

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

True/False

Review LaterAdd Note

Review Later

Defined benefit plans specify the amount of benefit an employee will receive on retirement while defined contribution plans specify the amounts that employers and employees will (or can) contribute to an employee's plan.

Correct Answer

verified

Show Answer

Question 32

True/False

Review LaterAdd Note

Review Later

Individual 401(k) plans generally have higher contribution limits than SEP IRAs.

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

Jenny (35 years old) is considering making a one-time contribution to either a traditional 401(k) plan or to a Roth 401(k) plan. She plans to withdraw the account balance when she retires in 40 years. Jenny expects to earn a 7% before-tax rate of return no matter which plan she contributes to. Which of the following statements is true?

Distributions from defined benefit plans are taxed as long-term capital gains to beneficiaries.

When employees contribute to a Roth 401(k) account, they ________ allowed to deduct the contributions and they ________ taxed on distributions from the plan.

Which of the following statements comparing qualified defined contribution plans and nonqualified deferred compensation plans is false?

Dean has earned $70,000 annually for the past 4½ years working as an architect for MWC. Under MWC's defined benefit plan (which uses a 5-year cliff 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. What is Dean's vested benefit (or annual benefit he has earned so far) ?

Lisa, age 45, needed some cash so she withdrew $50,000 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?

Aiko (single, age 29) earned $40,000 in 2018. He was able to contribute $1,800 ($150/month) to his employer sponsored 401(k). What is the total saver's credit that Aiko can claim for 2018? Exhibit 13-9

Taxpayers contributing to and receiving distributions from a Roth IRA generally earn a before-tax rate of return on their contributions equal to their after-tax rate of return.

Riley participates in his employer's 401(k) plan. He turns 70 years of age on February 15, 2017 and he plans on retiring on July 1, 2019. When must Riley receive his first distribution from the plan to avoid minimum distribution penalties?

Which of the following is not a self-employed retirement account?

Amy is single. During 2018, she determined her adjusted gross income was $12,000. During the year, Amy also contributed $1,500 to a Roth IRA. What is the maximum saver's credit she may claim for the year?

In 2018, Madison is a single taxpayer who is 25 years of age. During 2018, she contributed $3,000 to her employer sponsored 401(k) account. Her 2018 AGI was $67,500 (before considering IRA deductions). What is the maximum deductible contribution, if any, that Madison can make her to IRA?

Kathy is 60 years of age and self-employed. During 2018 she reported $500,000 of revenues and $100,000 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 a simplified employee pension (SEP) IRA for 2018? (Round your final answer to the nearest whole number)

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.

Retired taxpayers over 59½ years of age at the end of the year must receive minimum distributions from defined contribution plans or they are subject to a penalty.

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?

Qualified distributions from traditional IRAs are nontaxable while qualified distributions from Roth IRAs are fully taxable as ordinary income.

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