Final Exam > Question 1
Generally, a qualified plan must cover a broad spectrum of employees on a nondiscriminatory basis. Specifically, the plan may qualify if it covers at a minimum:
All full-time employees who are age 25 and over
XX70 percent of all nonhighly compensated employees
All full-time employees over age 21 with at least three years of service
All full-time employees earning in excess of the FICA limit
Final Exam > Question 2
ABC, Inc. established a qualified 401(k) plan. Scott Fix, the head accountant, was paid a flat salary of $40,000. The maximum employer contribution deduction allowable with respect to Scott's account in one year is:
$10,500
$15,500
$40,000
(Correct)$10,000
Final Exam > Question 3
The following statements made about the phaseout of deductible contributions to IRAs are false, except:
YYY f one spouse is a participant in a qualified plan for any part of the taxable year, the other spouse may not make deductible IRA contributions, even if the parties file joint returns.
A de minimis rule provides that a minimum deductible contribution may be made in the amount of $200 regardless of the amount of adjusted gross income.
(correct)The income phaseout limits for making deductible IRA contributions do not apply if neither taxpayer nor taxpayer's spouse participates in a qualified employer-sponsored retirement plan.
If an individual is precluded from making deductible IRA contributions, such individual also may not roll over a distribution from a qualified plan on a tax-deferred basis.
Final Exam > Question 4
Paul White is a 15 percent partner in White, Inc., laundry services. He is vested to the extent of $60,000 in the firm's defined benefit Keogh plan. If the plan permits it and adequate security and interest are provided, the maximum amount Ken may borrow from the plan is:
YYY $30,000
$10,000
$50,000
$0
Final Exam > Question 5
The following statements about Roth IRAs are all true, except:
XXA Roth IRA may not be started by an 85 year old.
A Roth IRA is attractive to taxpayers in a high tax bracket.
A beneficiary may receive all distributions tax-free.
Non Roth IRAs may be rolled over to a Roth IRA.
Final Exam > Question 6
The maximum yearly amount that an employee may contribute to a SIMPLE is:
$2,500
$3,000
$16,500
$5,000
XX$11,500
Final Exam > Question 7
Which of the following statements concerning Section 529 qualified state tuition plans is correct?
A contributor can change the designated beneficiary to any person who is unrelated to the original beneficiary.
Qualified educational expenses may include the cost of air travel to and from a qualified institution.
Qualified educational expenses may include tuition and books required to attend high school.
XXEarnings accumulate tax free and are tax exempt when distributed for qualified educational expenses.
Final Exam > Question 8
Minimum distributions from a Roth IRA must begin when the participant-taxpayer (not a designated beneficiary) reaches age:
59 1/2
62
65
70 1/2
XXThere is no minimum distribution requirement for a Roth IRA.
Final Exam > Question 9
Claire Hunt, age 19, earns a $14,000 salary as an assistant bookkeeper at the city's civic center. If Claire participates in her employer's 403(b) qualified plan, what is the maximum elective deferral amount she can contribute into the plan?
$3,500
$10,000
XX$14,000
$16,500
Final Exam > Question 10
What would be the amount of the maximum employer contribution if the plan is a 401(k) plan and the taxpayer's income is $270,000 (assume that no employee contributions are made).
XX$49,000
$62,500
$195,000
$245,000
Final Exam > Question 11
What is the amount of the maximum deduction a taxpayer can take on a contribution to a Roth IRA?
XX$0
$1,500
$2,000
$5,000
Final Exam > Question 12
Mary Edels, age 68 and retired, receives a $5,000 partial distribution from her 401(k) plan. The plan does not pay out an annuity. Immediately before the distribution, her account balance is $100,000, including $20,000 in nondeductible contributions. How much of the $5,000 distribution must Mary include in gross income?
$0
$1,000
(correct)$4,000
$5,000
Final Exam > Question 13
Tax-exempt organizations generally may establish:
401(k) plans for their employees
XX457(b) plans for their employees
SIMPLE plans for their employees
YYY None of the above
Final Exam > Question 14
Employers may be able to claim a tax credit for part of the ordinary and necessary costs of starting a:
SEP
SIMPLE
Qualified plan
XXAll of the above
Final Exam > Question 15
With qualified deferred compensation plans, plan assets are not protected from:
XXTaxation upon distribution
The employer
The employer’s creditors
The employee’s creditors