Question 1

Contributions to a qualified pension plan can be deducted immediately by an employer.

Accepted Answer

A) True 
 B)False  True

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

If an individual or spouse)is an active participant in an employer-sponsored retirement plan,he or she cannot make a deductible IRA contribution.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following statements is incorrect?

Accepted Answer

A)  An employer can require employees to make contributions as long as the plan is non-discriminatory.
B)  A profit-sharing plan does not qualify as a pension plan because the amount of profit in a year cannot be known in advance.
C)  Qualified pension plans may be contributory or noncontributory.
D)  With a defined-contribution plan,the amount of total retirement benefits is unknown.

Question 5

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 6

Mark is single and must start taking distributions from his traditional IRA beginning April 1,2016.At the end of 2015 when Mark was 71 years old,the IRA had a balance of $110,000.What amount must Mark take as a distribution from the IRA by April 1,2016?

Accepted Answer

A)  $7,190.
B)  $4,297.
C)  $4,151.
D)  $6,748.

Question 7

Escobar and Rose are both age 36 and file a joint return.Neither is covered under an employer plan.Escobar earned $121,000 of compensation in 2016.Rose worked part-time and earned $1,200.What is the maximum deductible IRA contribution they can make in 2016?

Accepted Answer

A)  $5,500.
B)  $6,700.
C)  $11,000.
D)  $0.

Question 8

Which of the following statements is incorrect?

Accepted Answer

A)  Tax-deferred plans have an accumulation period and a distribution period.
B)  Normally,if a retirement plan is funded with dollars that have already been taxed,the distributions will be taxed.
C)  Contributions to retirement plans are often limited in amount.
D)  During the accumulation period of a qualified retirement plan no taxes are due on the earnings from the plan investments.

Question 9

Contributions to a Coverdell Education Savings Account are not subject to AGI phaseout rules.

Accepted Answer

A) True 
 B)False

Question 10

Contributions to a Coverdell Education Savings Account can only be made by the parents or grandparents of a child under the age of 18.

Accepted Answer

A) True 
 B)False

Question 11

Jill is single,age 27,and reported AGI of $62,000 in tax year 2016.She is an active participant in her employer's pension plan.What is the maximum deductible Roth IRA contribution she can make in 2016?

Accepted Answer

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

Question 12

If a retirement plan is funded with dollars that have not been taxed,the distributions will not be taxed.

Accepted Answer

A) True 
 B)False

Question 13

Puri is a self-employed Spanish teacher.Her earnings from self-employment before the Keogh deduction but after deducting half of the self-employment tax are $120,000.What is her maximum deductible Keogh contribution for 2016?

Accepted Answer

A)  $24,000.
B)  $96,000.
C)  $53,000.
D)  $30,000.

Question 14

Patrick is entitled to receive monthly payments of $1,500 over his life from his employer's qualified pension plan or he can take $1,300 monthly over his life and the life of his wife.The payments begin January 1,2016.He contributed $85,250 to the plan prior to his retirement.Patrick is 64 and his wife is 62.Using the simplified method,how much of the payments will be included in Patrick's taxable income for 2016 if he chooses to take $1,300 monthly over his life and the life of his wife?

Accepted Answer

A)  $3,300.
B)  $15,600.
C)  $1,300.
D)  $12,300.

Question 15

Generally,tax-deferred retirement plans are not required to make distributions to beneficiaries.

Accepted Answer

A) True 
 B)False

Question 16

In 2016,a 52-year-old participant in a 401k)plan may contribute a maximum of:

Accepted Answer

A)  $24,000.
B)  $6,000.
C)  $18,000.
D)  $53,000.

Question 17

Keisha established a Roth IRA in 2006.She contributes the maximum amount each year for the next 20 years and retires when she is 65.At the time of her retirement,the account has a balance of
$248,000,which is made up of $100,000 in contributions and the balance in earnings.What amount can Keisha withdraw tax-free from the Roth IRA each year during her retirement?

Accepted Answer

The answer of Keisha established a Roth IRA in 2006.She...

Question 18

In order to obtain and retain qualified status,a pension or profit-sharing plan must not discriminate in favor of highly compensated employees which include:

Accepted Answer

A)  Employees who received over $100,000 compensation in the previous year and were in the top 20% of employees based on compensation.
B)  Employees who received over $120,000 of compensation in the previous year and were in the top 25% of employees based on compensation.
C)  Employees who own more than 5% of the corporation's stock.
D)  None of these.

Question 19

Which of the following statements regarding a Coverdell Education Savings Account CESA)is correct?

Accepted Answer

A)  Distributions used to pay qualified higher education expenses of the beneficiary are tax-free.
B)  A person can contribute to a CESA only if the beneficiary is related by blood or marriage.
C)  Contributions to a CESA are tax deductible and the distributions are tax-free if used for their intended purpose) .
D)  Taxpayers who file a joint tax return can contribute to a CESA only if their AGI is less than $150,000.

Question 20

Augustus is single and age 51.He had AGI of $41,000 in tax year 2016 and is an active participant in his employer's pension plan.What is the maximum deductible IRA contribution he can make in 2016?

Accepted Answer

A)  $3,800.
B)  $6,500.
C)  $2,700.
D)  $5,500.

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

Contributions to a qualified pension plan can be deducted immediately by an employer.

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

If an individual or spouse)is an active participant in an employer-sponsored retirement plan,he or she cannot make a deductible IRA contribution.

Which of the following statements is incorrect?

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.

Mark is single and must start taking distributions from his traditional IRA beginning April 1,2016.At the end of 2015 when Mark was 71 years old,the IRA had a balance of $110,000.What amount must Mark take as a distribution from the IRA by April 1,2016?

Escobar and Rose are both age 36 and file a joint return.Neither is covered under an employer plan.Escobar earned $121,000 of compensation in 2016.Rose worked part-time and earned $1,200.What is the maximum deductible IRA contribution they can make in 2016?

Which of the following statements is incorrect?

Contributions to a Coverdell Education Savings Account are not subject to AGI phaseout rules.

Contributions to a Coverdell Education Savings Account can only be made by the parents or grandparents of a child under the age of 18.

Jill is single,age 27,and reported AGI of $62,000 in tax year 2016.She is an active participant in her employer's pension plan.What is the maximum deductible Roth IRA contribution she can make in 2016?

If a retirement plan is funded with dollars that have not been taxed,the distributions will not be taxed.

Puri is a self-employed Spanish teacher.Her earnings from self-employment before the Keogh deduction but after deducting half of the self-employment tax are $120,000.What is her maximum deductible Keogh contribution for 2016?

Generally,tax-deferred retirement plans are not required to make distributions to beneficiaries.

In 2016,a 52-year-old participant in a 401k) plan may contribute a maximum of:

In order to obtain and retain qualified status,a pension or profit-sharing plan must not discriminate in favor of highly compensated employees which include:

Which of the following statements regarding a Coverdell Education Savings Account CESA) is correct?

Augustus is single and age 51.He had AGI of $41,000 in tax year 2016 and is an active participant in his employer's pension plan.What is the maximum deductible IRA contribution he can make in 2016?