Rebuilding Retirement Savings: Tax Strategies (Second Edition) (00306757)

This three CPE hour course explores some of the tax planning techniques that can help individuals rebuild their retirement portfolios following the recent economic downturn. The current economic downturn has caused losses of substantial value of most retirement accounts, contributing to the decline of individuals’ retirement savings by more than 40 percent in many cases. Those individuals not nearing retirement age should also take heed of the recent economic meltdown, learning lessons of diversification in terms of investments and investment/retirement savings vehicles. This course will examine how income from different types of retirement vehicles is taxed, as well as the different tax strategies that may help individuals and retirees rebuild their retirement savings after the serious market downturn has reduced their retirement portfolios.

Final Exam > Results Page

final exam score:

final exam status:

100%

Question 1

Correct

Married couples filing jointly or individuals can use up to _______ of net capital losses each year to offset their ordinary income.

$1,000

(You Answered) (Correct Answer) $3,000

$5,000

Question 2

Correct

For 2012, the maximum tax rate on wages is ______; capital gains are taxed at a maximum rate of ______.

(You Answered) (Correct Answer) 35 percent; 15 percent

30 percent; 15 percent

25 percent; 20 percent

Question 3

Correct

The portion of annuity payments not included in gross income is:

(You Answered) (Correct Answer) The payment multiplied by the exclusion ratio

The percentage of adjusted basis of the annuity balance at commencement of payments

The percentage of payments constituting appreciation of the assets

Question 4

Correct

A disadvantage of annuity contracts compared with other retirement investment types is:

(You Answered) (Correct Answer) A distribution from an annuity is taxed as ordinary income, not at a lower dividend or capital gains tax rate.

The income stream of annuities fluctuates more than distributions from 401(k) plans or securities’ dividends.

Annuity contracts have fixed age requirements for commencing distributions, whereas other retirement plans such as traditional IRAs or 401(k) plans do not.

Question 5

Correct

For the 2012 tax year, employees younger than age 50 may elect to defer income in their 401(k) plan up to 100 percent of eligible compensation or up to a maximum of _______.

$12,000

(You Answered) (Correct Answer) $17,000

$22,000

Question 6

Correct

After-tax contributions are made by employees to their Roth 401(k) plan’s:

Defined benefit account

(You Answered) (Correct Answer) Designated Roth account

Deferred vesting Roth account

Question 7

Correct

Hardship distributions from 401(k) plans:

May be replaced without penalty within six months

(You Answered) (Correct Answer) Are taxed as ordinary income and subject to income tax withholding

May not be applied to costs of casualty damage to an individual’s primary residence

Question 8

Correct

Unless the loan is used to make a first-time home purchase, loan funds from a 401(k) plan:

May not exceed $10,000

Are treated identically with hardship distributions

(You Answered) (Correct Answer) Must be repaid within five years to avoid income taxation and the early withdrawal penalty

Question 9

Correct

The maximum deductible contribution to a traditional IRA for individuals younger than age 50 is _______ for 2012.

(You Answered) (Correct Answer) $5,000

$6,000

$10,000

Question 10

Correct

The Worker, Retiree, and Employer Recovery Act of 2008:

Prohibited terminated employees from contributing to a traditional IRA in 2009

(You Answered) (Correct Answer) Allowed traditional IRA distribution recipients not to take a required minimum distribution in 2009

Prohibited traditional IRA distributions for 2009

Question 11

Correct

To report a loss in a Roth IRA account, the individual:

Simply lists the loss as an itemized deduction on his or her tax return for the year the loss occurs

(You Answered) (Correct Answer) Must liquidate all of his or her Roth IRAs (but not traditional IRAs)

Takes the loss as a long-term capital loss at the time distributions commence

Question 12

Correct

To qualify for the saver’s credit in 2012, an individual must not be:

Older than age eighteen

A part-time student

(You Answered) (Correct Answer) Claimed as a dependent on another’s return

Question 13

Correct

Elective 401(k) employee contributions are not subject to income tax at the time of deferral but are taxable wages for _________ tax purposes.

Excise

(You Answered) (Correct Answer) Employment

Estate and gift

Question 14

Correct

A major factor in determining whether to convert from a traditional IRA to a Roth IRA is:

Ease and convenience of a Roth IRA

Normally much higher interest rates offered by Roth IRAs

(You Answered) (Correct Answer) Whether the individual will be in a lower or higher tax bracket after retirement

Question 15

Correct

Individuals may need to_____________ if they have already filed their return for the tax year in which a recharacterization of an IRA conversion is made.

(You Answered) (Correct Answer) File an amended return

Ask for IRS permission to make the recharacterization

Roll an amount over into a traditional IRA