Exam 13: Retirement Savings and Deferred Compensation

A SEP IRA is an example of a self-employed retirement account.

Riley participates in his employer's 401(k)plan.He retired in 2017 at age 75.When must Riley receive his distribution pertaining to 2017 to avoid minimum distribution penalties?

In 2017,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 2017?

Bryan,who is 45 years old,had some surprise medical expenses during the year.To pay for these expenses (which were claimed as itemized deductions on his tax return),he received a $20,000 distribution from his traditional IRA (he has only made deductible contributions to the IRA).Assuming his marginal ordinary income tax rate is 15%,what amount of taxes and/or early distribution penalties will Bryan be required to pay on this distribution?

Kathy is 48 years of age and self-employed.During the year she reported $500,000 of revenues and $100,000 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)?

Which of the following statements regarding Roth IRAs distributions is true?

Which of the following best describes distributions from a defined benefit plan?

Joan recently started her career with PDEK Accounting,LLP which provides a defined benefit plan for all employees.Employees receive 1.5 percent of the average of their three highest annual salaries for each full year of service.Plan benefits vest under a 5-year cliff schedule.Joan worked 5½ years at PDEK before leaving for another opportunity.She received an annual salary of $49,000,$52,000,$58,000,$65,000,and $75,000 for years one through five respectively.Joan earned $40,000 of her $80,000 annual salary in year six.What is the vested benefit Joan is entitled to receive from PDEK for her retirement? Exhibit 13-1 in the text

Which of the following statements regarding defined benefit plans is false?

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

Riley participates in his employer's 401(k)plan.He turns 69 years of age on February 15,2017,and he plans on retiring on July 1,2017.When must Riley receive his first distribution from the plan to avoid minimum distribution penalties?

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

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 files as a head of household.She determined her 2017 adjusted gross income was $70,000.During the year,she contributed $2,500 to a Roth IRA.What is the maximum saver's credit she may claim for 2017?

Taxpayers never pay tax on the earnings of a traditional 401(k)account.

Defined benefit plans specify the amount of benefit an employee will receive on retirement while defined contribution plans specify the amounts that employers and employees will (or can)contribute to an employee's plan.

Which of the following statements regarding self-employed retirement accounts is true?

Which of the following is true concerning employer funding of nonqualified deferred compensation plans?

Which of the following statements is true regarding distributions from Roth 401(k)accounts?

Both employers and employees may contribute to defined contribution plans.However,the amount that employees may contribute to the plan in a given year is limited by the tax law while the amount that employers may contribute is not.