Question 1

Habiba is age 74 and married.Her husband is age 73.She purchased a single life annuity contract that will pay her $20,000 per year for life.The expected return on the contract is

Accepted Answer

A)   $264,000.
B)   $278,000.
C)   $282,000.
D)   $476,000.

Question 2

What are the tax consequence(s) related to a qualified pension plan?

Accepted Answer

A)   Employer contributions are deductible when made.
B)   Earnings on the contributions are taxable as they are earned.
C)   Employees are not taxed until distributions are received from the plan.
D)   Only Employer contributions are deductible when made and Employees are not taxed until distributions are received from the plan.

Question 3

In order to obtain and retain qualified status,a pension or profit-sharing plan must not discriminate in favor of highly compensated employees which include:

Accepted Answer

A)   Employees who own more than 5% of the corporation's stock.
B)   Employees who received over $85,000 compensation in the previous year.
C)   Employees who were in the top 25% of employees based on compensation.
D)   None of these.

Question 4

In 2014,the maximum annual contribution to a SIMPLE pension plan for an employee under the age of 50 is:

Accepted Answer

A)   $5,000
B)   $12,000
C)   $17,500
D)   $52,000

Question 5

For taxpayers under age 50,contributions can be made to a Roth IRA in an amount equal to the lower of $5,500 or 100% of compensation,plus the amount of contributions for the year to other IRAs.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is incorrect?

Accepted Answer

A)   Qualified pension plans may be contributory or noncontributory.
B)   An employer can require employees to make contributions as long as the plan is non-discriminatory.
C)   A profit-sharing plan does not qualify as a pension plan because the amount of profit in a year cannot be known in advance.
D)   With a defined-contribution plan,the amount of total retirement benefits is unknown.

Question 7

Which of the following statements is incorrect?

Accepted Answer

A)   A SIMPLE plan is an employer-sponsored retirement plan.
B)   A payment to a beneficiary from a pension plan is called a distribution.
C)   Tax-deferred plans can be created for purposes other than retirement.
D)   Retirement plans are always funded with contributions that have not been taxed,so the withdrawals are taxed.

Question 8

Kaysia participates in a SIMPLE plan provided by her employer.In 2014,she contributes 6% of her $40,000 salary,and her employer contributes 3% to the plan.What amount of the contributions will be vested in her account at the end of 2014?

Accepted Answer

A)   $0.
B)   $1,200.
C)   $2,400.
D)   $3,600.

Question 9

To calculate the taxable amount of an annuity payment,the taxpayer must determine the expected return under the contract.

Accepted Answer

A) True 
 B)False

Question 10

If a taxpayer funded some contributions to a qualified pension plan with previously-taxed dollars,then some of the distributions from that plan during retirement will be nontaxable.

Accepted Answer

A) True 
 B)False

Question 11

Venkat is age 32,single,and reported AGI of $66,000 in tax year 2014.He is an active participant in his employer's pension plan.What is the maximum deductible IRA contribution he can make in 2014?

Accepted Answer

A)   $0.
B)   $2,200.
C)   $3,300.
D)   $5,500.

Question 12

Retirement plans can be categorized into employer-sponsored plans and individual-based plans.What is the distinction? Give examples of plans in both categories.

Accepted Answer

Employer-sponsored plans are established...

Question 13

Xavier is a self-employed plumber.His earnings from self-employment,before the Keogh deduction but after deducting half of the self-employment tax,are $80,000.What is his deductible Keogh contribution for 2014?

Accepted Answer

A)   $16,000.
B)   $20,000.
C)   $52,000.
D)   $64,000.

Question 14

Damian is age 77.He purchased a single life annuity contract that will pay him $6,000 per month for life.The expected return on the contract is:

Accepted Answer

A)   $67,200.
B)   $806,400.
C)   $871,200.
D)   $1,526,400.

Question 15

Valerie and Marty are both age 51 and file a joint return.They have one child who is age 17.They have combined AGI in 2014 of $180,000.What is their maximum permitted contribution to a Coverdell Education Savings Account for 2014 assuming no other persons make contributions?

Accepted Answer

A)   $0.
B)   $2,000.
C)   $5,500.
D)   $6,500.

Question 16

Individuals who are active participants in an employer-sponsored retirement plan may make a deductible contribution to a traditional IRA in certain circumstances.

Accepted Answer

A) True 
 B)False

Question 17

With a Roth IRA,contributions are deductible,the account grows tax-free,and distributions are not taxable.

Accepted Answer

A) True 
 B)False

Question 18

Defined-contribution plans establish the amount of retirement benefits an employee will receive in retirement.

Accepted Answer

A) True 
 B)False

Question 19

Individuals age 50 or older can make greater annual contributions to an IRA.

Accepted Answer

A) True 
 B)False

Question 20

Retirement accounts include traditional IRAs,Roth IRAs,Keoghs,and Coverdell Education Savings Accounts.

Accepted Answer

A) True 
 B)False

Exam 11: Retirement and Other Tax-Deferred Plans and Annuities

Retirement plans can be categorized into employer-sponsored plans and individual-based plans.What is the distinction? Give examples of plans in both categories.

Correct AnswerverifiedEmployer-sponsored plans are established...View AnswerShow Answer

Retirement accounts include traditional IRAs,Roth IRAs,Keoghs,and Coverdell Education Savings Accounts.

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

For taxpayers under age 50,contributions can be made to a Roth IRA in an amount equal to the lower of $5,500 or 100% of compensation,plus the amount of contributions for the year to other IRAs.

Correct AnswerverifiedShow Answer

In 2014,the maximum annual contribution to a SIMPLE pension plan for an employee under the age of 50 is:

Correct AnswerverifiedShow Answer

Defined-contribution plans establish the amount of retirement benefits an employee will receive in retirement.

Correct AnswerverifiedShow Answer

In order to obtain and retain qualified status,a pension or profit-sharing plan must not discriminate in favor of highly compensated employees which include:

Correct AnswerverifiedShow Answer

Damian is age 77.He purchased a single life annuity contract that will pay him $6,000 per month for life.The expected return on the contract is:

Correct AnswerverifiedShow Answer

If a taxpayer funded some contributions to a qualified pension plan with previously-taxed dollars,then some of the distributions from that plan during retirement will be nontaxable.

Correct AnswerverifiedShow Answer

With a Roth IRA,contributions are deductible,the account grows tax-free,and distributions are not taxable.

Correct AnswerverifiedShow Answer

To calculate the taxable amount of an annuity payment,the taxpayer must determine the expected return under the contract.

Correct AnswerverifiedShow Answer

Individuals age 50 or older can make greater annual contributions to an IRA.

Correct AnswerverifiedShow Answer

Xavier is a self-employed plumber.His earnings from self-employment,before the Keogh deduction but after deducting half of the self-employment tax,are $80,000.What is his deductible Keogh contribution for 2014?

Correct AnswerverifiedShow Answer

Venkat is age 32,single,and reported AGI of $66,000 in tax year 2014.He is an active participant in his employer's pension plan.What is the maximum deductible IRA contribution he can make in 2014?

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Valerie and Marty are both age 51 and file a joint return.They have one child who is age 17.They have combined AGI in 2014 of $180,000.What is their maximum permitted contribution to a Coverdell Education Savings Account for 2014 assuming no other persons make contributions?

Correct AnswerverifiedShow Answer

Kaysia participates in a SIMPLE plan provided by her employer.In 2014,she contributes 6% of her $40,000 salary,and her employer contributes 3% to the plan.What amount of the contributions will be vested in her account at the end of 2014?

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What are the tax consequence(s) related to a qualified pension plan?

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Individuals who are active participants in an employer-sponsored retirement plan may make a deductible contribution to a traditional IRA in certain circumstances.

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Habiba is age 74 and married.Her husband is age 73.She purchased a single life annuity contract that will pay her $20,000 per year for life.The expected return on the contract is

Correct AnswerverifiedShow Answer

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Employer-sponsored plans are established...
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