Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Employees age 50 or over can contribute an additional ________ per year to a 401(k) plan.

Accepted Answer

A)  $18,000 
B)  $6,500 
C)  $6,000 
D) $1,000

Question 3

Defined-contribution plans establish the amount of retirement benefits an employee will receive in retirement.

Accepted Answer

A) True 
 B)False

Question 4

Augustus is single and age 51. He had AGI of $41,000 in tax year 2015 and is an active participant in his employer's pension plan. What is the maximum deductible IRA contribution he can make in 2015?

Accepted Answer

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

Question 5

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, 2015. 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 2015 if he chooses to take $1,300 monthly over his life and the life of his wife?

Accepted Answer

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

Question 6

Jill is single, age 27, and reported AGI of $62,000 in tax year 2015. She is an active participant in her employer's pension plan. What is the maximum deductible Roth IRA contribution she can make in 2015?

Accepted Answer

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

Question 7

If a taxpayer funded some contributions to a qualified pension plan with previously-taxed dollars, then some of the distributions from that plan during retirement will be nontaxable.

Accepted Answer

A) True 
 B)False

Question 8

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 9

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

Accepted Answer

A) True 
 B)False

Question 10

With a Roth IRA, contributions are deductible, the account grows tax-free, and distributions are not taxable.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Felix is age 74 and his wife is age 73. He purchased a single life annuity contract that will pay him $80,000 per year for life. The expected return on the contract is

Accepted Answer

A)  $1,904,000. 
B)  $1,128,000. 
C)  $1,112,000. 
D) $1,056,000.

Question 13

Regarding withdrawals from a Roth IRA:

Accepted Answer

A)  There are minimum withdrawal requirements for a Roth IRA. 
B)  Roth IRA withdrawals are taxable if made after the five-tax-year period beginning with the first tax year in which a Roth contribution was made. 
C)  Roth withdrawals are deemed to first come from contributions followed by earnings. 
D) Withdrawals that fail to meet the five-year holding period requirement are not taxable to the extent they do not exceed earnings.

Question 14

Regarding a Coverdell Education Savings Account:

Accepted Answer

A)  Distributions are tax-free to the beneficiary if they are used for his or her qualified education expenses. 
B)  Qualified education expenses include required tuition, fees, books, supplies, and equipment at an eligible educational institution. 
C)  Qualified expenses must be reduced by scholarships or other tax-free income. 
D) All of these.

Question 15

Mark is single and must start making distributions from his traditional IRA beginning April 1, 2015. At the end of 2014 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, 2015?

Accepted Answer

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

Question 16

Annual contributions to a Keogh plan cannot exceed the greater of $53,000 or 100% of compensation.

Accepted Answer

A) True 
 B)False

Question 17

Regarding a full or partial rollover of assets from one retirement plan to another retirement plan:

Accepted Answer

A)  Rollovers are normally taxable to the beneficiary. 
B)  Rollovers are permitted only in unusual circumstances. 
C)  A tax-free rollover can be made from a traditional IRA to another traditional IRA. 
D) A tax-free rollover can be made from a traditional IRA to a Roth IRA.

Question 18

Max retired in 2015 at age 62. During the year he received distributions of $9,000 from his IRA. He made nondeductible contributions of $20,000 to the IRA in prior years and has never received a nontaxable distribution. As of December 31, 2015, the value of his IRA was $150,000. Calculate the taxable portion of Max's distribution.

Accepted Answer

A)  $0. 
B)  $1,132. 
C)  $7,868. 
D) $9,000.

Question 19

Damian is age 77. He purchased a single life annuity contract that will pay him $6,000 per month for life. The expected return on the contract is:

Accepted Answer

A)  $67,200. 
B)  $806,400. 
C)  $871,200. 
D) $1,526,400.

Question 20

Damian is age 77. He paid $600,000 for a single life annuity contract that will pay him $72,000 per year for life. The tax-free amount of the first $72,000 payment is

Accepted Answer

A)  $18,429. 
B)  $28,302. 
C)  $49,587. 
D) $53,571.

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

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

Employees age 50 or over can contribute an additional ________ per year to a 401(k) plan.

Defined-contribution plans establish the amount of retirement benefits an employee will receive in retirement.

Augustus is single and age 51. He had AGI of $41,000 in tax year 2015 and is an active participant in his employer's pension plan. What is the maximum deductible IRA contribution he can make in 2015?

Jill is single, age 27, and reported AGI of $62,000 in tax year 2015. She is an active participant in her employer's pension plan. What is the maximum deductible Roth IRA contribution she can make in 2015?

If a taxpayer funded some contributions to a qualified pension plan with previously-taxed dollars, then some of the distributions from that plan during retirement will be nontaxable.

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.

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

With a Roth IRA, contributions are deductible, the account grows tax-free, and distributions are not taxable.

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

Felix is age 74 and his wife is age 73. He purchased a single life annuity contract that will pay him $80,000 per year for life. The expected return on the contract is

Regarding withdrawals from a Roth IRA:

Regarding a Coverdell Education Savings Account:

Mark is single and must start making distributions from his traditional IRA beginning April 1, 2015. At the end of 2014 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, 2015?

Annual contributions to a Keogh plan cannot exceed the greater of $53,000 or 100% of compensation.

Regarding a full or partial rollover of assets from one retirement plan to another retirement plan:

Damian is age 77. He purchased a single life annuity contract that will pay him $6,000 per month for life. The expected return on the contract is:

Damian is age 77. He paid $600,000 for a single life annuity contract that will pay him $72,000 per year for life. The tax-free amount of the first $72,000 payment is