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Qualified vs Non-Qualified Retirement Plans

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Qualified vs Non-Qualified Retirement Plans

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Questions and Answers

What is a key advantage of qualified retirement plans?

They provide tax deductions for business expenses and tax-deferred benefits to employees. (correct)

They allow for employer funding to be treated as taxable income to employees.

They require high minimum contributions from employees.

They are not considered a business expense for the employer.

Which type of plan allows for employer contributions that can be deducted as business expenses?

All retirement plans allow deduction of employer contributions.

Qualified plans allow employer funding contributions to be deducted as business expenses. (correct)

Non-qualified plans only allow contributions to be treated as employee compensation.

Only defined benefit (DB) plans are eligible for employer deductions.

Which of the following retirement plans is designed to help mitigate longevity risk?

401(k) plans with employer matching contributions.

Defined contribution (DC) plans that provide fixed payouts.

Traditional IRAs that limit withdrawal options.

Annuities that offer guaranteed income for a lifetime. (correct)

What distinguishes non-qualified retirement plans from qualified plans?

<p>Non-qualified plans do not offer tax-deferred growth for the employee.</p> Signup and view all the answers

Which retirement plan typically allows for after-tax contributions that grow tax-free upon withdrawal?

<p>Roth IRA</p> Signup and view all the answers

Study Notes

Qualified Retirement Plans

Deductible as a business expense
Not taxable income to the employee until received as benefits

Non-Qualified Retirement Plans

Do not allow employer funding contributions to be deducted as business expenses
Unless classified as compensation to the employee

Retirement Plan Types

DC (Defined Contribution) plans: Popular retirement plans
DB (Defined Benefit) plans: Popular retirement plans
401(k): Popular retirement plan
IRA (Individual Retirement Account): Popular retirement plan
Roth IRA: Popular retirement plan

Annuities

Understand different types of annuities
Know the options available with annuities
Understand the advantages and disadvantages of annuities
Learn how annuities can be used to mitigate longevity risk

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Description

This quiz covers the key differences between qualified and non-qualified retirement plans, including tax implications and types of plans such as 401(k)s and IRAs. Learn about annuities and how they can help manage longevity risk in retirement. Test your knowledge on various retirement planning concepts and strategies.