Podcast
Questions and Answers
Post-tax dollar contributions are found in?
Post-tax dollar contributions are found in?
What is a retirement plan that sets aside part of the company's net income for distributions to qualified employees?
What is a retirement plan that sets aside part of the company's net income for distributions to qualified employees?
Profit-sharing plan
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?
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?
100
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid mandatory income tax withholding on the transfer amount.
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid mandatory income tax withholding on the transfer amount.
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What deduction qualifies the widow of a deceased IRA account holder?
What deduction qualifies the widow of a deceased IRA account holder?
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Which plan is intended to be used by a sole proprietor and the employees of that business?
Which plan is intended to be used by a sole proprietor and the employees of that business?
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All of the following statements about traditional individual retirement accounts are false EXCEPT: 10% penalty is applied to withdrawals before age 59 1/2.
All of the following statements about traditional individual retirement accounts are false EXCEPT: 10% penalty is applied to withdrawals before age 59 1/2.
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What happens to traditional individual retirement accounts after age 59 1/2?
What happens to traditional individual retirement accounts after age 59 1/2?
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What is the penalty tax for premature IRA distributions?
What is the penalty tax for premature IRA distributions?
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If an individual working part-time has an annual income of $25,000, what is the maximum deductible IRA contribution allowable?
If an individual working part-time has an annual income of $25,000, what is the maximum deductible IRA contribution allowable?
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When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?
When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?
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Which taxes apply if an IRA participant receives distributions prior to age 59 1/2?
Which taxes apply if an IRA participant receives distributions prior to age 59 1/2?
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If the owner of an IRA names their spouse as beneficiary but then dies before any distributions are made, the account can be rolled into the surviving spouse's IRA.
If the owner of an IRA names their spouse as beneficiary but then dies before any distributions are made, the account can be rolled into the surviving spouse's IRA.
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What are the yearly contributions to an employee's account in a qualified retirement plan restricted by?
What are the yearly contributions to an employee's account in a qualified retirement plan restricted by?
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What type of employee welfare plans are not subject to ERISA regulations?
What type of employee welfare plans are not subject to ERISA regulations?
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How long does an individual have to 'rollover' funds from an IRA or qualified plan?
How long does an individual have to 'rollover' funds from an IRA or qualified plan?
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What is a qualified profit-sharing plan designed to do?
What is a qualified profit-sharing plan designed to do?
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If a 55 year old withdraws $30,000 from a previous employer's 401k plan without rolling over, what taxes apply?
If a 55 year old withdraws $30,000 from a previous employer's 401k plan without rolling over, what taxes apply?
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What eligibility does an employer get by offering a qualified retirement plan to its employees?
What eligibility does an employer get by offering a qualified retirement plan to its employees?
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Which retirement plan can be started by an employee even if another plan is in existence?
Which retirement plan can be started by an employee even if another plan is in existence?
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Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
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When must traditional individual retirement annuity (IRA) distributions start?
When must traditional individual retirement annuity (IRA) distributions start?
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In an individual retirement account (IRA), rollover contributions are limited by dollar amount.
In an individual retirement account (IRA), rollover contributions are limited by dollar amount.
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What is the income tax withholding requirement for a participant personally receiving eligible rollover funds from a profit-sharing plan?
What is the income tax withholding requirement for a participant personally receiving eligible rollover funds from a profit-sharing plan?
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What happens if an individual at the age of 45 withdraws $50,000 from his Qualified Profit-Sharing Plan?
What happens if an individual at the age of 45 withdraws $50,000 from his Qualified Profit-Sharing Plan?
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At what age can an IRA owner start making withdrawals without being subjected to a tax penalty?
At what age can an IRA owner start making withdrawals without being subjected to a tax penalty?
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How are Roth IRA distributions normally taxed?
How are Roth IRA distributions normally taxed?
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Study Notes
Contributions and Accounts
- Post-tax dollar contributions are primarily associated with Roth IRAs.
- Traditional IRAs impose a 10% penalty for withdrawals before age 59 1/2.
- For individuals earning at least $5,000, a SIMPLE retirement plan can involve up to 100 employees.
- Roth IRA distributions are tax-free when taken.
Retirement Plans and Transfers
- Profit-sharing plans allocate a portion of company income for employee distributions.
- A trustee-to-trustee transfer of rollover funds allows participants to avoid mandatory income tax withholding.
- Keogh Plans cater specifically to sole proprietors and their employees.
Taxes and Penalties
- Premature IRA distributions incur a 10% penalty tax.
- Individuals under 59 1/2 face ordinary income tax plus a 10% penalty on pre-age 59 1/2 distributions.
- If no rollover occurs, an individual faces taxes and a 10% penalty on distributions from a 401(k) plan.
Rollovers and Withdrawals
- Rollover contributions in an IRA are not limited by a dollar amount.
- Participants have a 60-day window to complete rollovers from IRAs or qualified plans.
- Withdrawals can begin without incurring penalties at age 59 1/2.
Specific Retirement Plan Features
- Qualified profit-sharing plans allow employees to share in company profits.
- Employers offering qualified retirement plans can make tax-deductible contributions.
- Annuities are suitable for retired individuals wishing to invest a lump sum.
Beneficiaries and Distributions
- If an IRA owner dies, the account can be rolled into the surviving spouse's IRA.
- Traditional IRA distributions must commence by April 1 following the individual's 70 1/2 birthday.
Compliance and Regulations
- Church plans are considered employee welfare plans exempt from ERISA regulations.
- Income tax withholding of 20% applies to eligible rollover funds received personally from profit-sharing plans.
Summary and Key Points
- Maximum deductible IRA contributions for an individual earning $25,000 are capped at their annual income.
- An individual can participate in both employer-sponsored plans and An Individual Retirement Account (IRA) simultaneously.
Studying That Suits You
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Description
Test your knowledge on retirement plans with these flashcards! This quiz covers key terms and concepts such as Roth IRAs and profit-sharing plans. Perfect for students preparing for an exam or anyone looking to brush up on retirement planning terminology.
