Questions and Answers
What percentage of tax is withheld when funds are shifted straight from one IRA to another IRA?
None
What is the income tax withholding requirement when an individual receives eligible rollover funds from a profit-sharing plan?
20%
At what age can an IRA owner start making withdrawals without being subjected to a tax penalty?
59 1/2
What results from withdrawing $50,000 from a Qualified Profit-Sharing Plan at the age of 45?
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If Tom has a qualified retirement plan that is 80% vested, what does this mean?
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What is the penalty tax for premature IRA distributions?
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How are Roth IRA distributions normally taxed?
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What are the yearly contributions to an employee's account in a qualified retirement plan restricted by?
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Which plan is intended for use by a sole proprietor and the employees of that business?
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Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?
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Study Notes
IRA Transfers and Withdrawals
- No tax is withheld when transferring funds directly between IRAs.
- Eligible rollover funds from profit-sharing plans incur a 20% federal tax withholding requirement.
- Withdrawals from a Traditional IRA can start without penalty at age 59 1/2.
Early Withdrawal Consequences
- Withdrawing $50,000 from a Qualified Profit-Sharing Plan at age 45 results in income tax and a 10% penalty.
- Premature IRA distributions are subject to a 10% penalty tax.
Retirement Plan Vesting and Contributions
- An 80% vested status means that 20% of a retirement plan's funds could be forfeited if employment ends.
- Annual contributions to qualified retirement plans are capped by IRS-set limits.
Specific Retirement Plans
- Keogh Plans are designed for sole proprietors to include their employees in the retirement plan.
- The employee is recognized as the owner of a 403(b) tax-sheltered annuity.
Taxation of Roth IRA Distributions
- Qualified distributions from a Roth IRA are received income tax-free.
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Description
Explore the intricacies of IRA transfers, withdrawals, and the associated tax implications in this quiz. Understand the rules surrounding early withdrawals, retirement plan contributions, and specific plans like Keogh and 403(b). Test your knowledge on how these elements interact with IRS regulations.
