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Questions and Answers
Under a Traditional IRA, when is interest earned taxed?
Under a Traditional IRA, when is interest earned taxed?
upon distribution
All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT?
All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT?
Who were Keogh plans designed to provide pension benefits for?
Who were Keogh plans designed to provide pension benefits for?
the self-employed
Which of the following would disqualify a company's retirement plan from receiving favorable tax treatment?
Which of the following would disqualify a company's retirement plan from receiving favorable tax treatment?
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A Roth IRA owner must be at least what age in order to make tax-free withdrawals?
A Roth IRA owner must be at least what age in order to make tax-free withdrawals?
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At what age can Erica, who is 35 years old, begin to receive distributions from her IRA without a tax penalty?
At what age can Erica, who is 35 years old, begin to receive distributions from her IRA without a tax penalty?
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Which of these retirement plans do NOT qualify for a federal income tax deduction?
Which of these retirement plans do NOT qualify for a federal income tax deduction?
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Earnings from Traditional IRAs are taxable when withdrawn.
Earnings from Traditional IRAs are taxable when withdrawn.
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What benefit allows Rob to defer his income receipt and have it paid later?
What benefit allows Rob to defer his income receipt and have it paid later?
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A rollover from a Traditional IRA to another IRA MUST be done within ___ days to avoid tax consequences.
A rollover from a Traditional IRA to another IRA MUST be done within ___ days to avoid tax consequences.
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As a beneficiary, what taxes will Mike pay on his inherited father's traditional IRA withdrawals?
As a beneficiary, what taxes will Mike pay on his inherited father's traditional IRA withdrawals?
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What kind of annuity is Dana's individual annuity considered?
What kind of annuity is Dana's individual annuity considered?
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An example of a tax-qualified retirement plan would be a(n)
An example of a tax-qualified retirement plan would be a(n)
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Within how many days must a Traditional IRA be rolled over to another IRA to avoid tax consequences?
Within how many days must a Traditional IRA be rolled over to another IRA to avoid tax consequences?
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Which employer is required to follow ERISA regulations?
Which employer is required to follow ERISA regulations?
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How are contributions made to a Roth IRA handled for tax purposes?
How are contributions made to a Roth IRA handled for tax purposes?
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Which of the following is NOT a federal requirement of a qualified plan?
Which of the following is NOT a federal requirement of a qualified plan?
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When a qualified plan starts making payments to its recipient, which portion of the distributions is taxable?
When a qualified plan starts making payments to its recipient, which portion of the distributions is taxable?
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Study Notes
Traditional IRA
- Interest earned in a Traditional IRA is taxed upon distribution.
Early Withdrawal Penalty
- All withdrawals from qualified plans are subject to a 10% tax penalty for early distribution, except for specific exemptions; stock purchases are not exempt.
Keogh Plans
- Designed to provide pension benefits primarily for the self-employed.
Retirement Plan Tax Treatment
- A retirement plan may lose favorable tax treatment if it is temporary in nature.
Roth IRA Withdrawals
- Owners must be at least 59 1/2 years old and have held the account for a minimum of 5 years to make tax-free withdrawals.
IRA Distribution Age
- Erica, aged 35, must wait until she is 59 1/2 to receive distributions from her IRA without incurring a tax penalty.
Federal Income Tax Deductions
- Roth IRAs do not qualify for a federal income tax deduction.
Traditional IRA Characteristics
- Earnings in a Traditional IRA become taxable when withdrawn.
Deferred Compensation
- Rob's deferred compensation option allows him to delay income receipt and pay taxes at a potentially lower rate later.
IRA Rollover Deadline
- A rollover from a Traditional IRA to another IRA must be completed within 60 days to avoid tax consequences.
Inherited IRA Taxation
- As a beneficiary, Mike will pay income taxes on any money withdrawn from his father's traditional IRA.
Qualified Retirement Annuities
- Dana's individual annuity, with company contributions to a separate pension plan, is classified as a qualified retirement annuity.
Defined Contribution Plans
- An example of a tax-qualified retirement plan is a defined contribution plan.
ERISA Regulations
- A local electrical supply company with 12 employees is required to follow ERISA regulations.
Roth IRA Contributions
- Contributions to a Roth IRA are not tax-deductible.
Qualified Plan Contributions
- Federal regulations do not require employees to be able to make unlimited contributions to a qualified plan.
Taxable Portions of Distributions
- When distributions begin from a qualified plan, only the gains portion is taxable.
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Description
Test your knowledge on retirement accounts with this Excel Chapter 10 flashcard quiz. The flashcards cover important concepts such as Traditional IRAs, tax penalties, and Keogh plans. Enhance your understanding of retirement planning essentials.
