Questions and Answers
In an individual retirement account (IRA), rollover contributions are:
What is the maximum number of employees (earning at least 5,000) that an employer can have in order to start a simple retirement plan?
Which plan is intended to be used by a sole proprietor and the employees of that business?
An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?
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An employer that offers a qualified retirement plan to its employees is eligible to:
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What type of employee welfare plans are not subject to ERISA regulations?
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At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan. This action would result in:
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Premature IRA distributions are assessed a penalty tax of:
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How are Roth IRA distributions normally taxed?
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In a qualified retirement plan, the yearly contributions to an employee's account:
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Study Notes
IRA Rollover Contributions
- Rollover contributions in an IRA are not limited by dollar amount.
SIMPLE Retirement Plans
- An employer can start a SIMPLE retirement plan if they have up to 100 employees earning at least $5,000.
Business Retirement Plans
- The Keogh Plan is designed for sole proprietors and their employees.
IRA Contribution Deductions
- An individual earning $25,000 annually can contribute up to the full amount to their IRA as a deductible contribution.
Employer Contributions to Qualified Retirement Plans
- Employers offering a qualified retirement plan can make tax-deductible contributions to the plan.
ERISA Regulations
- Church plans are exempt from ERISA regulations.
Withdrawals from Qualified Profit-Sharing Plans
- Withdrawing from a Qualified Profit-Sharing Plan incurs income tax and a 10% penalty if done before age 59½.
Penalty for Premature IRA Distributions
- Premature distributions from an IRA are subject to a 10% penalty tax.
Roth IRA Tax Treatment
- Roth IRA distributions are received tax-free, without penalties or taxes on qualified distributions.
Contribution Limits in Qualified Retirement Plans
- Yearly contributions to an employee's account in a qualified retirement plan are restricted to maximum levels set by the IRS.
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Description
Test your knowledge of retirement plans with these flashcards from Chapter 9. Each card covers important concepts related to Individual Retirement Accounts (IRAs) and their features. Perfect for anyone looking to strengthen their understanding of retirement planning.
