Question 1

Distributions from a traditional IRA:

Accepted Answer

A)  Are fully taxable if the IRA was entirely funded with deductible contributions. 
B)  Are always fully taxable. 
C)  Are always nontaxable. 
D)  Are fully taxable if the IRA was entirely funded with nondeductible contributions. 
A)  Are fully taxable if the IRA was entirely funded with deductible contributions. 
B)  Are always fully taxable. 
C)  Are always nontaxable. 
D)  Are fully taxable if the IRA was entirely funded with nondeductible contributions. A

Question 2

What are some of the significant tax benefits for both employees and employers associated with a qualified pension plan?

Accepted Answer

• The employer gets an immediate deduction for contributions to the plan. 
• Employer contributions for the benefit of the employee are not compensation to the employee when the contribution is made. 
• Earnings from investments held by the plan are not subject to tax until distributed. 
• Plan assets or earnings are not taxable to employees until the amounts are distributed.

Question 3

Maurice is age 44,single,and reported AGI of $68,000 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)  $1,100. 
C)  $4,400. 
D)  $5,500. 
A)  $0. 
B)  $1,100. 
C)  $4,400. 
D)  $5,500. B

Question 4

Distributions from a Coverdell Education Savings Account are tax-free to the beneficiary if they are used for his or her qualified education expenses.

Accepted Answer

A) True 
 B)False

Question 5

Omar is single,age 46,and reported AGI of $124,000 in tax year 2014.He is an active participant in his employer's pension plan.What is the maximum Roth IRA contribution he can make in 2014?

Accepted Answer

A)  $0. 
B)  $1,833. 
C)  $3,667. 
D)  $5,500. 
A)  $0. 
B)  $1,833. 
C)  $3,667. 
D)  $5,500.

Question 6

What is the maximum deductible contribution that can be made to one or more deductible IRAs in each of the following instances?
a.A single person,age 41,who is not an active participant in an employer-sponsored retirement plan with AGI of $97,000.
b.A married couple,ages 33 and 34,neither of whom is an active participant in an employer-sponsored retirement plan.One spouse has W-2 income of $57,000 and the other spouse did not work.
c.A married couple,ages 44 and 48.One spouse is covered under an employer-sponsored retirement plan and the other is not.The covered spouse has W-2 income of $125,000 and the non-covered spouse has W-2 income of $32,000.

Accepted Answer

a.$5,500. b.$11,000. c.$5,500 (for the n

Question 7

If only one spouse is employed,and that spouse is not covered under an employer-sponsored retirement plan,then the non-working spouse can make a deductible contribution to his or her own IRA.

Accepted Answer

A) True 
 B)False

Question 8

Distributions from a qualified pension plan may be fully taxable,nontaxable,or a combination of both.

Accepted Answer

A) True 
 B)False

Question 9

Zena must start making distributions from her traditional IRA beginning April 1,2014.At the end of 2013,the plan had a balance of $220,000 and Zena was 71 years old.What minimum amount must Zena take as a distribution from the IRA beginning April 1,2014?

Accepted Answer

A)  $8,302. 
B)  $8,594. 
C)  $13,497. 
D)  $14,379. 
A)  $8,302. 
B)  $8,594. 
C)  $13,497. 
D)  $14,379.

Question 10

Patrick is age 30,single,and has AGI of $101,000.He would like to contribute to a Coverdell Education Savings Account (CESA)for his niece,Eileen.What is the maximum CESA contribution Patrick can make for Eileen in 2014?

Accepted Answer

A)  $0. 
B)  $1,200. 
C)  $1,500. 
D)  $2,000. 
A)  $0. 
B)  $1,200. 
C)  $1,500. 
D)  $2,000.

Question 11

Distributions from a Coverdell Education Savings Account are tax-free to the beneficiary if they are used for his or her qualified education expenses.

Accepted Answer

A) True 
 B)False

Question 12

What is a good rule of thumb you should use when thinking about the taxability of retirement plan distributions?

Accepted Answer

A good rule of thumb is: if the plan is

Question 13

Under a qualified profit-sharing plan,contributions must be made at least annually whether or not the employer has positive net income for the year.

Accepted Answer

A) True 
 B)False

Question 14

Benjamin and Ester file a joint return and have AGI of $165,000.Both are active participants in their employer's pension plan.They have one child,Emily,who is age 8.Emily's grandparents contributed $1,000 to a Coverdell Education Savings Account for Emily in 2014.What is the maximum permitted Coverdell Education Savings Account contribution that Benjamin and Ester can make in 2014?

Accepted Answer

A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $5,500. 
A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $5,500.

Question 15

Jill is single,age 27,and reported AGI of $62,000 in tax year 2014.She is an active participant in her employer's pension plan.What is the maximum deductible Roth IRA contribution she can make in 2014?

Accepted Answer

A)  $0. 
B)  $1,100. 
C)  $4,400. 
D)  $5,500. 
A)  $0. 
B)  $1,100. 
C)  $4,400. 
D)  $5,500.

Question 16

At the end of 2012,Erin was 73 years old and her traditional IRA had a balance of $200,000.She properly withdrew $8,403 from her IRA in 2013.In 2013,her IRA assets earned $25,000.What amount must Erin take as a distribution from her IRA in 2014?

Accepted Answer

A)  $8,733. 
B)  $9,458. 
C)  $9,825. 
D)  Some other amount. 
A)  $8,733. 
B)  $9,458. 
C)  $9,825. 
D)  Some other amount.

Question 17

SIMPLE and SEP plans are subject to the same nondiscrimination rules that apply to other retirement plans.

Accepted Answer

A) True 
 B)False

Question 18

SIMPLE plans are not subject to the nondiscrimination rules for other qualified plans.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is incorrect?

Accepted Answer

A)  The exclusion ratio represents the proportion of each annuity payment that will be tax-free. 
B)  If annuity payments are to be received for a fixed period,the taxpayer does not need to refer to the life expectancy tables provided by the IRS. 
C)  To determine the taxable amount of each annuity payment,the taxpayer must know the cost of the contract. 
D)  Once the cost of the annuity has been recovered,any remaining payments will be tax-free. 
A)  The exclusion ratio represents the proportion of each annuity payment that will be tax-free. 
B)  If annuity payments are to be received for a fixed period,the taxpayer does not need to refer to the life expectancy tables provided by the IRS. 
C)  To determine the taxable amount of each annuity payment,the taxpayer must know the cost of the contract. 
D)  Once the cost of the annuity has been recovered,any remaining payments will be tax-free.

Question 20

Pension plans must meet complex rules to retain their tax-advantaged status.These rules include all of the following except:

Accepted Answer

A)  The plan must not discriminate in favor of highly compensated employees. 
B)  Employee and employer contributions must fully vest within five years. 
C)  The plan must adequately cover rank-and-file employees. 
D)  The plan must be established for the exclusive benefit of employees and their beneficiaries. 
A)  The plan must not discriminate in favor of highly compensated employees. 
B)  Employee and employer contributions must fully vest within five years. 
C)  The plan must adequately cover rank-and-file employees. 
D)  The plan must be established for the exclusive benefit of employees and their beneficiaries.

Distributions from a traditional IRA:

What are some of the significant tax benefits for both employees and employers associated with a qualified pension plan?

Maurice is age 44,single,and reported AGI of $68,000 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?

Distributions from a Coverdell Education Savings Account are tax-free to the beneficiary if they are used for his or her qualified education expenses.

Omar is single,age 46,and reported AGI of $124,000 in tax year 2014.He is an active participant in his employer's pension plan.What is the maximum Roth IRA contribution he can make in 2014?

If only one spouse is employed,and that spouse is not covered under an employer-sponsored retirement plan,then the non-working spouse can make a deductible contribution to his or her own IRA.

Distributions from a qualified pension plan may be fully taxable,nontaxable,or a combination of both.

Zena must start making distributions from her traditional IRA beginning April 1,2014.At the end of 2013,the plan had a balance of $220,000 and Zena was 71 years old.What minimum amount must Zena take as a distribution from the IRA beginning April 1,2014?

Patrick is age 30,single,and has AGI of $101,000.He would like to contribute to a Coverdell Education Savings Account (CESA)for his niece,Eileen.What is the maximum CESA contribution Patrick can make for Eileen in 2014?

Distributions from a Coverdell Education Savings Account are tax-free to the beneficiary if they are used for his or her qualified education expenses.

What is a good rule of thumb you should use when thinking about the taxability of retirement plan distributions?

Under a qualified profit-sharing plan,contributions must be made at least annually whether or not the employer has positive net income for the year.

Jill is single,age 27,and reported AGI of $62,000 in tax year 2014.She is an active participant in her employer's pension plan.What is the maximum deductible Roth IRA contribution she can make in 2014?

At the end of 2012,Erin was 73 years old and her traditional IRA had a balance of $200,000.She properly withdrew $8,403 from her IRA in 2013.In 2013,her IRA assets earned $25,000.What amount must Erin take as a distribution from her IRA in 2014?

SIMPLE and SEP plans are subject to the same nondiscrimination rules that apply to other retirement plans.

SIMPLE plans are not subject to the nondiscrimination rules for other qualified plans.

Which of the following statements is incorrect?

Pension plans must meet complex rules to retain their tax-advantaged status.These rules include all of the following except:

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

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

Distributions from a traditional IRA:

What are some of the significant tax benefits for both employees and employers associated with a qualified pension plan?

Maurice is age 44,single,and reported AGI of $68,000 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?

Distributions from a Coverdell Education Savings Account are tax-free to the beneficiary if they are used for his or her qualified education expenses.

Omar is single,age 46,and reported AGI of $124,000 in tax year 2014.He is an active participant in his employer's pension plan.What is the maximum Roth IRA contribution he can make in 2014?

If only one spouse is employed,and that spouse is not covered under an employer-sponsored retirement plan,then the non-working spouse can make a deductible contribution to his or her own IRA.

Distributions from a qualified pension plan may be fully taxable,nontaxable,or a combination of both.

Zena must start making distributions from her traditional IRA beginning April 1,2014.At the end of 2013,the plan had a balance of $220,000 and Zena was 71 years old.What minimum amount must Zena take as a distribution from the IRA beginning April 1,2014?

Patrick is age 30,single,and has AGI of $101,000.He would like to contribute to a Coverdell Education Savings Account (CESA)for his niece,Eileen.What is the maximum CESA contribution Patrick can make for Eileen in 2014?

Distributions from a Coverdell Education Savings Account are tax-free to the beneficiary if they are used for his or her qualified education expenses.

What is a good rule of thumb you should use when thinking about the taxability of retirement plan distributions?

Under a qualified profit-sharing plan,contributions must be made at least annually whether or not the employer has positive net income for the year.

Jill is single,age 27,and reported AGI of $62,000 in tax year 2014.She is an active participant in her employer's pension plan.What is the maximum deductible Roth IRA contribution she can make in 2014?

At the end of 2012,Erin was 73 years old and her traditional IRA had a balance of $200,000.She properly withdrew $8,403 from her IRA in 2013.In 2013,her IRA assets earned $25,000.What amount must Erin take as a distribution from her IRA in 2014?

SIMPLE and SEP plans are subject to the same nondiscrimination rules that apply to other retirement plans.

SIMPLE plans are not subject to the nondiscrimination rules for other qualified plans.

Which of the following statements is incorrect?

Pension plans must meet complex rules to retain their tax-advantaged status.These rules include all of the following except:

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters