Exam 13: Retirement Savings and Deferred Compensation

Kathy is 48 years of age and self-employed.During 2019,she reported $100,000 of revenues and $40,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k)for 2019? Assume she paid $8,478 of self-employment tax for 2019.(Round your final answer to the nearest whole number.)

When employees contribute to a Roth 401(k)account,they ________ allowed to deduct the contributions and they ________ taxed on qualified distributions from the plan.

This year,Ryan contributed 10 percent of his $75,000 annual salary to a Roth 401(k)account sponsored by his employer,XYZ.XYZ offers a dollar-for-dollar match up to 10 percent of the employee's salary.The employer contributions are placed in a traditional 401(k)account on the employee's behalf.Ryan expects to earn an 8-percent before-tax rate of return on contributions to his Roth and traditional 401(k)accounts.Assuming Ryan leaves the funds in the accounts until he retires in 25 years,what are his after-tax accumulations in the Roth 401(k)and in the traditional 401(k)accounts if his marginal tax rate at retirement is 30 percent? If Ryan's marginal tax rate this year is 35 percent,will he earn a higher after-tax rate of return from the Roth 401(k)or the traditional 401(k)? Explain.(Round future value factors to five decimal places and the future value and final answers to the nearest whole number.)

In 2019,Madison is a single taxpayer who is 25 years of age.During 2019,she contributed $3,000 to her employer-sponsored 401(k)account.Her 2019 AGI was $68,500 (before considering IRA deductions).What is the maximum deductible contribution,if any,that Madison can make to her IRA?

Jacob participates in his employer's defined benefit plan.He has worked for his employer for four full years.If his employer uses a five-year cliff vesting schedule,Jacob will need to work another year in order to vest in any of his defined benefit plan retirement benefits.

Which of the following statements is true regarding taxpayers receiving distributions from traditional defined contribution plans?

Taxpayers contributing to and receiving distributions from a Roth IRA generally earn a before-tax rate of return on their contributions equal to their after-tax rate of return.

If a taxpayer's marginal tax rate is decreasing,a taxpayer contributing to a traditional IRA can earn an after-tax rate of return greater than her before-tax rate of return.

Amy is single.During 2019,she determined her adjusted gross income was $12,000.During the year,Amy also contributed $2,500 to a Roth IRA.What is the maximum saver's credit she may claim for the year?

In 2019,Tyson (age 52)earned $50,000 of salary.Assuming he does not participate in an employer-sponsored plan,what is the maximum deductible IRA contribution Tyson can make in 2019?

On December 1,2019,Irene turned 71 years old.She is still working for her employer and she participates in her employer's 401(k)plan.Irene is not required to receive a minimum distribution for 2019 from her 401(k)account because she has not yet retired.