Which of the following statements are TRUE about Individual Retirement Accounts?
I. Contributions are allowed based solely upon personal service income
II. Contributions may be made if the individual is covered by another type of retirement plan
III. All
Contributions are allowed based solely upon personal service income
Contributions may be made if the individual is covered by another type of retirement plan
To remain tax deferred, distributions from other retirement plans
Which statement is TRUE about Roth IRAs?
a. Contributions are tax deductible; distributions after age 59 1/2 are not taxed
b. Contributions are not tax deductible; distributions after age 59 1/2 are not taxed
c. Contributions are tax deductible; distribut
Contributions are not tax deductible; distributions after age 59 1/2 are not taxed
Which statement is FALSE about a SIMPLE IRA?
a. the maximum annual contribution is the same as for a traditional IRA
b. the contribution is made by the employee, who gets a salary reduction for the amount contributed
c. the plan is only available to small
the maximum annual contribution is the same as for a traditional IRA
b. the contribution is
If a corporation has an unfunded pension liability this means that:
a. the expected future value of fund assets is less than projected benefit claims
b. the expected future value of fund assets is more than projected benefit claims
c. inflation has eroded
the expected future value of fund assets is less than projected benefit claims
In 2016, a self-employed person earning $300,000 wishes to open a Keogh Plan. The maximum yearly contribution is:
a. $5,500
b. $43,000
c. $53,000
d. $63,000
$53,000
A defined benefit plan:
a. excludes employees earning less than $20,000 per year
b. is required to vest 100% of contribution after 1 year's service
c. gives the greatest benefit to high salaried employees close to retirement age
d. bases contributions sol
gives the greatest benefit to high salaried employees close to retirement age
ERISA legislation was enacted to protect:
a. employee retirement funds from employer mismanagement
b. employee retirement funds from government mismanagement
c. retirement fund accounts against broker-dealer mismanagement
d. retirement fund accounts again
employee retirement funds from employer mismanagement
Distributions after age 59 1/2 from non-tax qualified retirement plans are:
a. 100% taxable
b. partial tax free return of capital and partial taxable income
c. 100% tax free
d. 100% tax deferred
partial tax free return of capital and partial taxable income
Distributions after age 59 1/2 from tax qualified retirement plans are:
a. 100% taxable
b. partial tax free return of capital and partial taxable income
c. 100% tax free
d. 100% tax deferred
100% taxable
Which of the following retirement plans is funded by an annual employee salary reduction of $7,000 (indexed for inflation annually)?
a. defined contribution plan
b. defined benefit plan
c. tax deferred annuity
d. 401(k) plan
401(k) plan
A 40 year old man wishes to remove monies from his IRA to fund his child's summer vacation. The customer has:
a. no tax liability
b. regular income tax liability only on the amount withdrawn
c. 10% penalty tax only on the amount withdrawn
d. both regular
both regular income tax liability and 10% penalty tax on the amount withdrawn
For the year 2016, the maximum contribution that an individual under age 50 can make to an IRA is:
a. $2,750
b. $5,500
c. $7,500
d. $11,000
$5,500
All of the following statements are true about SEP IRAs EXCEPT:
a. the plan is established by the employer
b. the plan allows for flexible contribution amounts
c. the amount that can be contributed is significantly greater than for a traditional IRA
d. th
the contributions made are no deductible
Distributions from Section 403(b) tax deferred annuities are:
a. 100% taxable
b. partial tax free return of capital and partial taxable income
c. 100% tax free
d. 100% tax deferred
100% taxable
A 50 year old individual leaves a corporate employer and receives a $50,000 lump sum distribution from the pension plan. He rolls over $30,000 of the funds within 60 days into an IRA and deposits the rest into his checking account. The individual pays:
a.
tax on the $20,000 not rolled over
The maximum annual contribution to a Coverdell Education Savings Account is:
a. $2,000
b. $2,500
c. $3,000
d. $4,000
$2,000
Which statements are TRUE about Coverdell Education Savings Accounts?
I. contributions can continue until the beneficiary reaches age 18
II. contributions can continue until the beneficiary reaches age 30
III. distributions to the beneficiary must be comp
contributions can continue until the beneficiary reaches age 18
distributions to the beneficiary must be completed upon reaching age 30
Which statements are TRUE about Coverdell Education Savings Accounts?
I. Contributions are tax deductible
II. contributions are not tax deductible
III. distributions are taxable
IV. distributions are not taxable
contributions are not tax deductible
distributions are not taxable
Distributions from Roth IRAs:
a. must commence by April 1st of the year prior to reaching the age of 70 1/2 without being penalized
b. must commence by April 1st of the year reaching age 70 1/2 without being penalized
c. must commence by April 1st of the
can commence at any time after reaching age 59 1/2 without being penalized
Distributions from Roth IRAs are subject to a penalty if withdrawals are made within:
a. 1 year of original contribution
b. 3 years of original contribution
c. 5 years of original contribution
d. 10 years of original contribution
5 years of original contribution
A distribution from a section 529 plan would be taxable if the beneficiary:
a. does not go to college
b. gets a full scholarship
c. goes on disability
d. goes to vocational school
does not go to college
State-sponsored education savings programs that permit contributions to build tax-deferred are known as:
a. Coverdell Education Savings Accounts
b. Educational IRAs
c. Section 529 plans
d. Section 403(b) plans
Section 529 plans
Section 529 plans are established by the:
a. state
b. donor
c. recipient
d. custodian
state
Catch-up IRA contributions are permitted for individuals who are at least age:
a. 40
b. 50
c. 60
d. 70
50
When comparing a Section 529 plans to Coverdell Education Savings Accounts, which statement is FALSE?
a. the account may be opened by any adult
b. annual contributions are limited to $2,000 per beneficiary
c. earning build in the account tax deferred
d. d
annual contributions are limited to $2,000 per beneficiary
Which statements are TRUE when comparing UTMA Custodian Accounts to Coverdell Education Savings Accounts?
I. Earnings in UTMA accounts are subject to Federal Income Tax
II. Earnings in UTMA accounts are not subject to federal income tax
III. earnings in C
Earnings in UTMA accounts are subject to Federal Income Tax
earnings in Coverdell education savings accounts are not subject to federal income tax
A customer that earns $200,000 per year wishes to set aside funds for his 12 year old daughter's future college expenses. Which statements are TRUE?
I. The customer can open a UTMA account for the daughter to deposit the funds
II. the customer cannot open
The customer can open a UTMA account for the daughter to deposit the funds
the customer cannot open a Coverdell ESA account for his daughter to deposit the funds
High earning individuals can make contributions to:
I. UGMA accounts
II. Roth IRAs
III. UTMA Accounts
IV. Coverdell ESAs
UGMA accounts
UTMA Accounts
Your customer, age 68, that has an IRA account at your firm valued at $500,000, passes away. The customer leaves the account to his wife, age 58. She has no need for current income as she is still working, and wishes to know her best option to minimize ta
roll the funds over into a new IRA in the spouse's name
If a non-spouse inherits an IRA, the beneficiary can:
I. roll over the IRA proceeds into an existing IRA owned by the beneficiary
II. elect to receive the entire IRA proceeds as an immediate lump sum
III. roll over the IRA proceeds into a new IRA set up b
elect to receive the entire IRA proceeds as an immediate lump sum
elect to receive the entire proceeds over the next 5 years under the "5 year rule" or the remaining life of the beneficiary, whichever is longer
Many years ago, a customer opened a Coverdell ESA for his son, who is now age 16, and a savings account for his daughter, who is now age 18. The 18-year-old daughter is entering college and does not have enough money in the savings account to pay for tuit
can change the beneficiary on the Coverdell ESA from the son to the daughter
Which statements are TRUE?
I. the name of the beneficiary on a Coverdell ESA can be changed to another beneficiary
II. the name of the beneficiary on a Coverdell ESA cannot be changed to another beneficiary
III. the name of a beneficiary (minor) on a UTMA
the name of the beneficiary on a Coverdell ESA can be changed to another beneficiary
The name of a beneficiary (minor) on a UTMA account cannot be changed to another beneficiary
An uncle opens a Coverdell ESA for his niece and makes deposits over a number of years. When she enters college, the niece withdraws $10,000 from her Coverdell ESA to pay for expenses. The student only uses $9,000 of the funds. The remaining $1,000:
a. mu
is taxable at ordinary income tax rates to the niece
A customer dies, leaving his $300,000 IRA account to his three daughters, who are age 46, 50, and 52. Which daughter's life expectancy would be used to determine the minimum annual payout to be made from the IRA?
a. the 46 year old daughter's age
b. the 5
the 52 year old daughter's age
Which statements are TRUE?
I. funds in a 529 plan can only be used for higher education expenses
II. funds in a 529 plan can be used for any qualifying education expenses
III. funds in a Coverdell ESA can only be used for higher education expenses
IV. fun
funds in a 529 plan can only be used for higher education expenses
funds in a Coverdell ESA can be used for any qualifying education expenses
All of the following statements are true about Health Savings Accounts EXCEPT:
a. HSAs are only appropriate for those individuals covered by high-deductible health insurance plans
b. HSAs can be set up to include dependents of the covered individual
c. HS
HSA contributions are subject to phase-out when an individual's income exceeds $250,000
Employees of non-profit organizations are permitted to establish tax deferred retirement plans, similar to Keogh, by making investments in a:
a. 401(k) plan
b. tax sheltered annuity
c. profit sharing plan
d. defined benefit plan
tax sheltered annuity
All of the following statements about 403(b) plans are true EXCEPT:
a. employees make voluntary contributions through their employees
b. contributions are tax deductible to the employee
c. employees of any organization can contribute to this type of plan
employees of any organization can contribute to this type of plan
A woman in the highest tax bracket has $105,000 to invest for her teenage child's college education. She wants to make sure that, if he doesn't attend college, that he will not have access to these funds. She should be advised to make the investment in a:
529 Plan
A 55-year old customer works as an auto mechanic. He has no intention of retiring until at least 75 and wants to put extra money away for his retirement at that time. He wants to make contributions over the 20-year time horizon until he reaches age 75 and
Roth IRA
Retirement plans that must comply with ERISA requirements include all of the following EXCEPT:
A. Defined benefit plans
B. Profit sharing plans
C. Federal Government plans
D. Payroll deduction savings plans
Federal Government plans
ERISA rules cover private retirement plans to protect employees from employer mismanagement of pension funds. It does not cover public sector retirement plans, such as federal government and state government plans, since these are
ERISA requirements regarding the investments that are suitable for a retirement account stress:
A. income potential
B. capital gain potential
C. safety of principal
D. legal list securities
safety of principal
ERISA rules regarding retirement plans stress that investments should be "safe.
Payments received by the owner of a tax qualified variable annuity are:
A. 100% taxable as investment income
B. only taxable to the extent of earnings above the holder's cost basis
C. only taxable to the extent of the holder's cost basis
D. non-taxable
100% taxable as investment income
Funds paid into "tax qualified" retirement plans were never subject to tax, since the contribution amount was deductible from income at the time it was made. Earnings build up tax deferred in the plan. When distributions
Which of the following statements are TRUE regarding contributions to, and distributions from, non-tax qualified retirement plans?
I. Contributions are made with before tax dollars
II. Contributions are made with after tax dollars
III. Distributions are 1
Contributions are made with after tax dollars
Distributions are partially tax free, with the amount above the original cost basis being taxed
Contributions to non-tax qualified plans are not tax deductible. They are made with "after-tax" dollars. Earnings
Which of the following statements are TRUE regarding defined benefit plans?
I. Actuarial tables are used to determine contribution rates for each employee
II. Distributions upon retirement are 100% taxable
III. Employees with the highest salaries and the
All of them
Which of the following statements are TRUE about non-contributory defined benefit retirement plans?
I. Contribution amounts are fixed
II. Contribution amounts vary
III. Annual benefit payments are fixed
IV. Annual benefit payments vary
Contribution amounts vary
Annual benefit payments are fixed
In a "defined benefit" retirement plan, contribution amounts vary based upon the age of the person covered under the plan. Larger contributions are made for older plan participants nearing retire
If a corporation has an unfunded pension liability, this means that:
A. inflation has eroded the value of the portfolio funding the plan
B. the plan is in default because the existing retirees' benefit claims are not being met
C. the expected future value
the expected future value of fund assets is less than projected benefit claims
An unfunded pension liability means that expected payments from the retirement plan are in excess of the expected future assets in the plan. It is common for defined benefit pe
Which of the following are characteristics of Defined Contribution Plans?
I. Annual contribution amounts are fixed
II. If the corporation has an unprofitable year, the contribution may be omitted
III. The annual benefit varies dependent on the number of y
Annual contribution amounts are fixed
The annual benefit varies dependent on the number of years that the employee is included
Under a defined contribution plan, a fixed percentage or dollar amount is contributed annually for each year that the employee i
Which of the following are characteristics of Defined Contribution Plans?
I. Annual contribution amounts are fixed
II. Annual contribution amounts will vary
III. If the corporation has an unprofitable year, the contribution may be omitted
IV. If the corpo
Annual contribution amounts are fixed
If the corporation has an unprofitable year, the contribution must still be made
Under a defined contribution plan, a fixed percentage or dollar amount is contributed annually for each year that the employee is includ
For the year 2017, the maximum contribution that a married couple, both under age 50, can make to an IRA is:
A. $5,500
B. $6,500
C. $8,250
D. $11,000
$11,000
For the year 2017, the maximum contribution to a spousal IRA is the lesser of 100% of income or $5,500 each in 2 accounts; for a total of $11,000.
In 2017, an unmarried person under age 50 earning $72,000 a year, is not covered by a pension plan. The maximum tax deductible Individual Retirement Account contribution for this year is:
A. 0
B. $5,500
C. $6,500
D. $7,500
$5,500
In the year 2017, the maximum contribution to an IRA is 100% of income up to $5,500 for an individual. If this person is not covered by a qualified retirement plan, regardless of income, the contribution is deductible.
A working couple has a combined income of $150,000. Neither are covered by an employer sponsored pension plan. Which statement is TRUE about IRA contributions by these persons?
A. IRA contributions are prohibited since these persons can be covered by an e
IRA contributions are permitted with the contribution amount being tax deductible
Anyone can contribute to an IRA, whether covered by a pension plan or not. If a couple is not covered by a qualified plan, the contribution is tax deductible and the maximum
In the year 2017, a divorced woman under age 50 collects $50,000 of alimony and child support as her sole source of income. The woman wishes to make a contribution to an Individual Retirement Account this year. Which statement is TRUE?
A. No contribution
A tax deductible contribution of up to $5,500 is permitted
Alimony and child support payments are classified as "earned income" for purposes of making IRA contributions. Thus, a woman whose sole support stems from these payments makes an IRA contribution.
In an Individual Retirement Account, a 6% penalty tax will be imposed for:
A. failing to make a contribution to an Individual Retirement Account by April 15th
B. the purchase of a mutual fund in an Individual Retirement Account
C. premature distributions
excess contributions to an Individual Retirement Account
Excess contributions to an Individual Retirement Account are subject to a 6% penalty tax. Do not confuse this penalty with that imposed on a premature distributions from an IRA. Premature distributi
For an Individual Retirement Account contribution to be deductible from that year's tax return, the contribution must be made by no later than:
A. April 15th of that year
B. December 31st of that year
C. April 15th of following year
D. December 31st of th
April 15th of following year
IRA contributions must be made by April 15th of the following year - no extensions are permitted.
All of the following are allowed investments into an Individual Retirement Account EXCEPT:
A. Preferred Stock
B. U.S. Government Bonds
C. U.S. Government Gold Coins
D. Antiques, Art, and Other Collectibles
Antiques, Art, and Other Collectibles
Collectibles are not allowed as an investment in an IRA account. Securities are allowed; so are gold coins minted by the U.S. Government, and precious metals bullion.
If an individual, aged 69, takes a withdrawal from his IRA, which statement is TRUE?
A. The amount withdrawn is subject to regular income tax only
B. The amount withdrawn is subject to a 10% penalty tax only
C. The amount withdrawn is subject to regular i
The amount withdrawn is subject to regular income tax only
Before age 59 1/2, distributions from an IRA are subject to regular income tax plus a 10% penalty tax. Afterwards, withdrawals are subject to regular tax; but not to the 10% penalty tax.
A 55 year old woman wishes to remove funds from her Individual Retirement Account to remodel her house. The customer is subject to:
A. no tax liability
B. regular income tax liability only on the amount withdrawn
C. 10% penalty tax only on the amount with
both regular income tax liability and 10% penalty tax on the amount withdrawn
Premature distributions from an IRA (before age 59 1/2), unless for reason of death, disability, to pay qualified education expenses, or to pay up to $10,000 of first-time home
A 50-year old becomes disabled and wishes to withdraw money from his IRA. With regard to the withdrawal, how will it be taxed?
A. There will be no tax due
B. The withdrawal is subject to income tax only
C. The withdrawal is only subject to penalty tax onl
The withdrawal is subject to income tax only
If an individual becomes disabled before age 59 1/2, distributions can be taken without penalty tax. However, since income tax has never been taken on the withdrawal, it will be subject to regular income tax.
Distributions from an Individual Retirement Account must commence by age:
A. 50 1/2
B. 59 1/2
C. 70 1/2
D. 75 1/2
70 1/2
Distributions from an Individual Retirement Account must commence by April 1st of the year following that person reaching age 70 1/2.
Which statements are TRUE regarding RMDs (Required Minimum Distributions) from IRA accounts?
I. The RMD is based on the life expectancy of the account beneficiary
II. The RMD is based on the investment value of the account
III. If the RMD is not taken, a
The RMD is based on the life expectancy of the account beneficiary
If the RMD is not taken, a penalty tax of 50% is applied
The penalty applied for not taking required minimum distributions from a qualified plan starting at age 70 1/2 is 50% of the under-
A company has decided to terminate its retirement plan and is going to make lump sum distributions to its employees. In order to defer taxation on the distribution, the employee may:
A. buy tax exempt municipal bonds
B. buy a single premium deferred annui
roll over the funds into an Individual Retirement Account within 60 days
Lump sum distributions from qualified plans can be "rolled over" into an IRA without dollar limit and remain tax deferred as long as the rollover is performed within 60 days of the d
A new customer, age 45, has been terminated from his assembly-line job of the past 20 years at an automotive parts supplier. During that time period, he has accumulated $124,000 in the company's 401(k) plan. He wishes to rollover the funds to an IRA accou
All of them
Distributions from qualified retirement plans that are not rolled over into an IRA or other qualified plan are subject to:
A. 6% withholding tax
B. 10% withholding tax
C. 20% withholding tax
D. 25% withholding tax
20% withholding tax
Distributions from qualified retirement plans, unless they are rolled over into an IRA, are taxable. To ensure that the tax will be paid, the tax code requires that 20% of the distribution amount be withheld as a credit against taxes d
All of the following statements are true regarding the transfer of Individual Retirement Accounts from one trustee to another EXCEPT:
A. there is no limit on the number of transfers that can be made each year
B. the funds can be transferred by having the
the funds can be transferred by having the trustee or custodian make a check payable to the account holder; who will then deposit the check with the new trustee or custodian
IRA transfers between trustees must be made directly from trustee to trustee. The
Your customer, age 68, that has an IRA account at your firm valued at $500,000, passes away. The customer leaves the account to his son, age 38. He has no need for current income as he is still working, and wishes to know his best option to minimize taxes
transfer the IRA funds to a beneficiary distribution account
Since the son is the beneficiary, the most advantageous option, which is to roll over the account, is not available. Roll overs of inherited IRAs are only available to spouses. The best option i
All of the following are true statements about Individual Retirement Accounts EXCEPT:
A. the earliest a taxpayer may make an annual contribution is January 1st of that tax year
B. the latest a taxpayer may make an annual contribution is April 15th of the
if the taxpayer obtained a 4 month filing extension, he can make the annual contribution up to the extension date
Annual IRA contributions can be made anytime from January 1st of that year until April 15th of the next tax year. If the taxpayer requests an
Which of the following statements are TRUE regarding Individual Retirement Accounts?
I. The earliest a taxpayer can make an annual contribution is January 1st of that tax year
II. The latest a taxpayer can make an annual contribution is April 15th of the
The earliest a taxpayer can make an annual contribution is January 1st of that tax year
The latest a taxpayer can make an annual contribution is April 15th of the next tax year
Annual IRA contributions can be made anytime from January 1st of that year unt
Which statements are TRUE when comparing a Roth IRA to a Traditional IRA?
I. Traditional IRAs are available to anyone who has earned income
II. Roth IRAs are available to anyone who has earned income
III. Traditional IRAs are not available to high-earning
Traditional IRAs are available to anyone who has earned income
Roth IRAs are not available to high-earning individuals
Roth IRAs allow for the same contribution amounts as Traditional IRAs, but the contribution is never tax-deductible (which is usually th
Which statements are TRUE about Roth IRAs for tax year 2017?
I. The maximum permitted contribution for an individual is $2,750
II. The maximum permitted contribution for an individual is $5,500
III. If an individual contributes $5,500 to a Traditional IRA
The maximum permitted contribution for an individual is $5,500
If an individual contributes $5,500 to a Traditional IRA in that year, no additional contribution to a Roth IRA is permitted
For 2017, the maximum permitted annual contribution to a Roth IRA i
Which statements are TRUE about Roth IRAs?
I. Contributions must cease at age 70 1/2
II. Contributions can continue after age 70 1/2
III. Distributions must start after age 70 1/2
IV. Distributions are not required to start after age 70 1/2
Contributions can continue after age 70 1/2
Distributions are not required to start after age 70 1/2
Unlike Traditional IRAs, Roth IRA contributions can continue after age 70 1/2, as long as that person has earned income. And unlike Traditional IRAs, ther
When comparing Roth IRAs to Traditional IRAs, which statements are TRUE?
I. Traditional IRA contributions can be deductible; Roth IRA contributions are never deductible
II. Traditional IRA contributions are never deductible; Roth IRA contributions can be
Traditional IRA contributions can be deductible; Roth IRA contributions are never deductible
After age 59 1/2, distributions from Traditional IRAs can be taxable; distributions from Roth IRAs are never taxable
Roth IRAs, unlike Traditional IRAs, do not pe
In 2017, a doctor has earned $300,000 from her practice and another $200,000 from investments. Their maximum contribution to an HR 10 plan is:
A. $44,000
B. $54,000
C. $60,000
D. $107,000
$54,000
Keogh (HR10) contributions are based only on personal service income - not investment income. $300,000 of personal service income x 20% effective contribution rate = $60,000, however the maximum contribution allowed is $54,000 in 2017.
Contributions to qualified retirement plans, other than IRAs, must be made by:
A. December 31st of the calendar year in which the contribution may be claimed on that person's tax return
B. April 15th of the calendar year in which the contribution may be c
The date on which the tax return is filed with the Internal Revenue Service
Contributions to qualified retirement plans (other than IRAs) must be made no later than the date the tax return is filed (even if it is filed with an extension). On the other han
For an investor who has a Keogh Plan, which of the following statements are TRUE?
I. The plan is a tax qualified
II. The plan is non-tax qualified
III. Once distributions commence at age 59 1/2 or later, only the tax deferred build-up is taxed
IV. Once di
The plan is a tax qualified
Once distributions commence at age 59 1/2 or later, both the original investment and the build-up are taxed
Keoghs are tax qualified retirement plans for self employed individuals. The investment in a Keogh plan is tax deductib
A 50 1/2 year old self-employed individual has a balance of $200,000 in his HR 10 plan. This balance is composed of $140,000 of contributions and $60,000 of earnings. The individual decides to withdraw $100,000 from the plan. Which statement is TRUE?
A. T
There will be both regular tax liability and a 10% penalty tax liability
Since this individual is younger than age 59 1/2, any distribution from the Keogh plan is subject to both ordinary income tax plus the 10% penalty tax. If the distribution is made af
A small business owner of a firm that has 25 employees wants to establish a retirement plan and make contributions for her employees. What type of plan can the employer establish?
A. Traditional IRA
B. Roth IRA
C. SEP IRA
D. 403(b)
SEP IRA
Which statement is FALSE about a SIMPLE IRA?
A. The maximum contribution amount is the same as for a SEP IRA
B. The contribution is made by the employee, who gets a salary reduction for the amount contributed
C. The plan is only available to smaller emplo
The maximum contribution amount is the same as for a SEP IRA
Finally, SEP IRAs allow for a maximum contribution that is much larger than a SIMPLE IRA. In a SEP IRA, a contribution of up to 25% of salary (statutory rate; actual contribution rate is 20%), c
Which of the following statements are TRUE regarding tax sheltered annuities for employees of non-profit organizations?
I. These are known as 401(k) plans
II. These are known as 403(b) plans
III. Monies contributed to this plan are excluded from taxable i
These are known as 403(b) plans
Monies contributed to this plan are excluded from taxable income
Tax deferred annuities for employees of non-profit organizations are 403(b) plans. These retirement plans allow employees of non-profit institutions such as h
Which of the following investments are permitted for 403(b) plans?
I. Corporate stocks
II. Certificates of deposit
III. Fixed annuities
IV. Variable annuities
Fixed annuities
Variable annuities
403(b) retirement plans allow employees of non-profit institutions such as hospitals and universities to establish their own retirement plans if none is provided by the employer. The monies contributed are excluded from
Which of the following statements about 403(b) Plans are TRUE?
I. Contributions are tax deductible to the employee
II. Contributions are not tax deductible to the employee
III. These plans are available to employees of any organization
IV. These plans are
Contributions are tax deductible to the employee
These plans are available to non-profit organization employees only
403(b) plans are only available to non-profit organization employees, such as school and hospital employees. These are tax qualified annui
A salary reduction plan established by a for profit corporation that allows $7,000 per year (indexed for inflation) to be contributed, is a:
A. SEP IRA Plan
B. Defined Benefit Plan
C. 401(k) Plan
D. 403(b) Plan
401(k) plan
Which of the following statements are TRUE regarding contributions to 403(b) tax deferred annuities and the distributions from these plans after age 59 1/2?
I. Contributions are made with before tax dollars
II. Contributions are made with after tax dollar
Contributions are made with before tax dollars
Distributions are 100% taxable
Contributions to tax qualified plans such as 403(b) tax deferred annuities are tax deductible. They are made with "before-tax" dollars, hence those funds were never taxed. When
An individual, age 40, earns $60,000 per year. He has no family and has $200,000 of life insurance. He contributes 6% of his salary to his company sponsored 401(k) annually. He informs his registered representative that he is getting a $5,000 raise. What
Increase the 401(k) contributions by $5,000 per year
Since any permitted 401(k) contribution is deductible, it is best to recommend that the customer max out his 401(k). Remember, he can contribute up to 25% of salary, capped to $18,000 in 2017, and this
A client, age 35, is covered by a 401(k) plan at work and also has set up an IRA account. He has been contributing the maximum amount to each of these each year. He lives frugally and has excess income available for investment. He asks you, the registered
Variable Annuity
Anyone can contribute to a non-qualified variable annuity, with no contribution limits. It makes no difference if the customer is covered by another qualified plan. The contribution is not deductible, but the separate account builds tax d
The maximum annual contribution to a Coverdell Education Savings Account is:
A. $2,000
B. $2,500
C. $3,000
D. $4,000
$2,000
The maximum annual contribution to a Coverdell Education Savings Account for a single beneficiary is $2,000.
A tax deduction for a contribution to a Coverdell Education Savings Account is:
A. permitted without limitation
B. permitted only for persons earning below a statutory limit
C. not permitted unless the monies remain in the account for at least 5 years
D.
not permitted
A husband and wife are self-employed and have 3 children, ages 4, 7, and 9. They have a combined income of $300,000. They wish to open Coverdell ESAs for each of their children to pay for qualified education expenses. Which statement is TRUE?
A. They can
They are prohibited from opening an account for each child because they earn too much
Both Roth IRAs and Coverdell ESAs are not available to high-earning individuals. There is an income phase-out range, above which contributions are prohibited to either o
High earning individuals are prohibited from making contributions to:
I. Traditional IRAs
II. Roth IRAs
III. Coverdell ESAs
Roth IRAs
Coverdell ESAs
Any individual with earned income can open a Traditional IRA (whether the contribution will be deductible requires that the individual not be covered by another qualified plans and that person's income cannot be too high). High ea
If a distribution from a Coverdell Education Savings Account in a given year exceeds the beneficiary's qualified education expenses in that year, the:
A. excess distribution is not taxable
B. excess distribution is taxable and a 10% penalty is imposed
C.
excess distribution is taxable and a 10% penalty is imposed
Since contributions to Coverdell Education Savings Account are not deductible, normally, distributions from a Coverdell Education Savings Account to pay for qualified education expenses are not t
Which statements are TRUE when comparing UTMA Custodian Accounts to Coverdell Education Savings Accounts?
I. Contributions to UTMA accounts are limited to $2,000 annually
II. Contributions to Coverdell Education Savings Accounts are limited to $2,000 annu
Contributions to Coverdell Education Savings Accounts are limited to $2,000 annually
Earnings in UTMA accounts are subject to Federal income tax
Custodian accounts opened under either the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Mino
High earning individuals can make contributions to:
I. UGMA Accounts
II. Roth IRAs
III. UTMA Accounts
IV. Coverdell ESAs
UGMA Accounts
UTMA Accounts
Custodian accounts opened under either the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA) can be opened by any adult for any minor, with no limitation on the income of the donor in determining
Which statements are TRUE about Coverdell ESAs?
I. Assets grow tax-deferred and distributions are not taxable if used for qualified educational purposes
II. Contributions into the account are tax deductible to the donor
III. Any adult, regardless of incom
Assets grow tax-deferred and distributions are not taxable if used for qualified educational purposes
Unexpended funds can be transferred without tax liability to another relative in the same or younger generation as the beneficiary
Contributions to Cover
Section 529 plans are used to fund:
A. retirement needs
B. higher education needs
C. medical needs
D. disability needs
higher education needs
Section 529 plans are state sponsored savings plans used to fund higher education.
A grandmother wishes to make a gift into her grandson's 529 college savings plan. What is the maximum that can be contributed without incurring gift tax liability?
A. 1 times the annual gift tax exclusion amount
B. 2 times the annual gift tax exclusion am
5 times the annual gift tax exclusion amount
A tax benefit offered by 529 plans is a 1-time gift that can be made into the account equal to 5 times the current gift tax exclusion, without the donor worrying about having to pay gift tax. Since the current
A 529 plan is set up for a child in State A. The child attends a college in State B. Which statement is TRUE?
A. The funds in the 529 Plan are not portable and can't be used to pay for college in State B
B. The funds in the 529 Plan are portable and can b
The funds in the 529 Plan are portable and can be used to pay for college in State B
As long as the funds are used to pay for college, 529 Plans are completely portable - the money can be used to pay for college in any State.
Which statements are TRUE?
I. Contributions to a 529 plan are tax deductible
II. Contributions to a 529 plan are not tax deductible
III. Contributions to a Coverdell ESA are tax deductible
IV. Contributions to a Coverdell ESA are not tax deductible
Contributions to a 529 plan are not tax deductible
Contributions to a Coverdell ESA are not tax deductible
Contributions to both Coverdell ESAs and 529 plans are not tax deductible. Earnings build tax-deferred in both. Distributions from both, when used t
Which statements are TRUE?
I. Distributions from a 529 plan to pay for higher education costs are not taxable
II. Distributions from a 529 plan to pay for higher education costs are taxable
III. Distributions from a Coverdell ESA to pay for qualified educ
Distributions from a 529 plan to pay for higher education costs are not taxable
Distributions from a Coverdell ESA to pay for qualified education costs are not taxable
Contributions to both Coverdell ESAs and 529 plans are not tax deductible. Earnings bui
When comparing Section 529 plans to Coverdell Education Savings Accounts, which statement is FALSE?
A. The account may be opened by any adult
B. Annual contributions are limited to $2,000 per beneficiary
C. Earnings build in the account tax deferred
D. Di
Annual contributions are limited to $2,000 per beneficiary
There is a maximum $2,000 annual contribution into a Coverdell Education Savings Account; there is no maximum annual contribution into a Section 529 account - any contribution limits are set by th
Health Saving Accounts (HSAs):
I. can be established by all employers that offer health insurance plans
II. can only be established by employers that have high deductible health insurance plans
III. are funded with tax-deductible contributions
IV. are fun
can only be established by employers that have high deductible health insurance plans
are funded with tax-deductible contributions
Health Savings Accounts (HSAs) were first authorized by Congress starting in the beginning of 2004. They are a tax advantage