Question 1

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

Accepted Answer

A)  There are no minimum distribution requirements for distributions from Roth 401(k) accounts. 
B)  Qualified distributions are subject to taxation. 
C)  A taxpayer receiving a nonqualified distribution from a Roth 401(k) account may be taxed on a portion but not all of the distribution. 
D)  None of the choices is a True statement. 
A)  There are no minimum distribution requirements for distributions from Roth 401(k) accounts. 
B)  Qualified distributions are subject to taxation. 
C)  A taxpayer receiving a nonqualified distribution from a Roth 401(k) account may be taxed on a portion but not all of the distribution. 
D)  None of the choices is a True statement.

Question 2

When an employer matches an employee's contribution to the employee's 401(k) account, the employee is immediately taxed on the amount of the employer's matching contribution.

Accepted Answer

A) True 
 B)False

Question 3

Heidi (age 57) invested $4,000 in her Roth 401(k) on January 1, 2010. This was her only contribution to the account. On July 1, 2018, when the account balance was $6,000, she received a nonqualified distribution of $4,500. What is the taxable portion of the distribution and what amount of early distribution penalty will Heidi be required to pay on the distribution?

Accepted Answer

$1,500 taxable portion of dist

Question 4

In 2018, 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 2018?

Accepted Answer

$6,500
The maximum deductible

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Carmello and Leslie (ages 34 and 35, respectively) are married and want to contribute to a Roth IRA. In 2018, their AGI totaled $42,000 before any IRA-related transactions. Of the $42,000, Carmello earned $35,000 and Leslie earned $7,000. How much can each spouse contribute to a Roth IRA if they file jointly? How much can each spouse contribute to a Roth IRA if they file separately?

Accepted Answer

If they file jointly, each spouse can co

Question 7

Taxpayers who participate in an employer-sponsored retirement plan are not allowed to deduct contributions to individual retirement accounts (IRAs) under any circumstances.

Accepted Answer

A) True 
 B)False

Question 8

Individual 401(k) plans generally have higher contribution limits than SEP IRAs.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is True regarding employer-provided qualified retirement plans?

Accepted Answer

A)  May discriminate against rank and file employees. 
B)  Deductible contributions are generally phased-out based on AGI. 
C)  Executives are generally ineligible to participate in these plans. 
D)  They are generally referred to as defined benefit plans or defined contribution plans. 
A)  May discriminate against rank and file employees. 
B)  Deductible contributions are generally phased-out based on AGI. 
C)  Executives are generally ineligible to participate in these plans. 
D)  They are generally referred to as defined benefit plans or defined contribution plans.

Question 11

Qualified retirement plans include defined benefit plans but not defined contribution plans.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  are; are not 
B)  are; are 
C)  are not; are 
D)  are not; are not 
A)  are; are not 
B)  are; are 
C)  are not; are 
D)  are not; are not

Question 13

Yvette is a 44-year-old self-employed contractor (no employees). During 2018, her Schedule C net income was 500,000. Assuming Yvette has no contributions to other retirement plans. What is the maximum amount that Yvette can contribute to (1) a SEP IRA and (2) an individual 401(k)? (Round your answers to the nearest whole number).

Accepted Answer

SEP IRA = $55,000; Individual 401(k) = $

Question 14

Which of the following statements regarding Roth 401(k) accounts is False?

Accepted Answer

A)  Employees can make contributions to a Roth 401(k). 
B)  Employers can make contributions to Roth accounts on behalf of their employees. 
C)  Contributions to Roth 401(k) plans are not deductible. 
D)  Qualified distributions from Roth 401(k) plans are not taxable. 
A)  Employees can make contributions to a Roth 401(k). 
B)  Employers can make contributions to Roth accounts on behalf of their employees. 
C)  Contributions to Roth 401(k) plans are not deductible. 
D)  Qualified distributions from Roth 401(k) plans are not taxable.

Question 15

Katrina's executive compensation package allows her to participate in the company's nonqualified deferred compensation plan. In the current year, Katrina defers 15 percent of her $300,000 salary. Katrina's deemed investment choice will earn 8 percent annually on the deferred compensation until she takes a lump sum distribution in 10 years. Katrina's current marginal tax rate is 30 percent and she expects her marginal tax rate to be 28 percent upon receipt on the deferred salary. What is her after-tax accumulation from the deferred salary in 10 years? (Round future value factors to 5 decimal places and the future value and final answers to the nearest whole number)

Accepted Answer

$69,949
$45,000 ($300,000 × 15

Question 16

Which of the following statements regarding contributions to defined contribution plans is True?

Accepted Answer

A)  Employer contributions to a defined contribution plan are not limited by the tax law. 
B)  Employee contributions to a defined contribution plan are not limited by the tax law. 
C)  An employee who is at least 60 years of age as of the end of the year may contribute more to a defined contribution plan than an employee who has not reached age 60 by year-end. 
D)  The tax laws limit the sum of the employer and employee contributions to a defined contribution plan. 
A)  Employer contributions to a defined contribution plan are not limited by the tax law. 
B)  Employee contributions to a defined contribution plan are not limited by the tax law. 
C)  An employee who is at least 60 years of age as of the end of the year may contribute more to a defined contribution plan than an employee who has not reached age 60 by year-end. 
D)  The tax laws limit the sum of the employer and employee contributions to a defined contribution plan.

Question 17

Which of the following statements describes how a traditional 401(k) account is similar to a Roth 401(k) account?

Accepted Answer

A)  Employees contribute before-tax dollars to both types of accounts. 
B)  Distributions from a traditional 401(k) account and a Roth 401(k) account are both subject to minimum distribution penalties. 
C)  Both accounts can receive matching contributions from employers. 
D)  Employers generally choose how funds in these accounts will be invested. 
A)  Employees contribute before-tax dollars to both types of accounts. 
B)  Distributions from a traditional 401(k) account and a Roth 401(k) account are both subject to minimum distribution penalties. 
C)  Both accounts can receive matching contributions from employers. 
D)  Employers generally choose how funds in these accounts will be invested.

Question 18

Heidi retired from GE (her employer) at age 56. At the end of the year, when she was 56 years of age, Heidi received a distribution from her GE sponsored 401(k) account. Because Heidi was not at least 59½ years of age at the time of the distribution, she must pay tax on the full amount of the distribution and a 10 percent penalty on the full amount of the distribution.

Accepted Answer

A) True 
 B)False

Question 19

Deborah (single, age 29) earned $25,000 in 2018. Deborah was able to contribute $1,800 ($150/month) to her employer sponsored 401(k). What is the total saver's credit that Deborah can claim for 2018? Use Exhibit 13-9

Accepted Answer

$180
$1,800 (contribution amou

Question 20

Distributions from defined benefit plans are taxed as long-term capital gains to beneficiaries.

Accepted Answer

A) True 
 B)False

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

When an employer matches an employee's contribution to the employee's 401(k) account, the employee is immediately taxed on the amount of the employer's matching contribution.

In 2018, 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 2018?

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

Taxpayers who participate in an employer-sponsored retirement plan are not allowed to deduct contributions to individual retirement accounts (IRAs) under any circumstances.

Individual 401(k) plans generally have higher contribution limits than SEP IRAs.

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

Which of the following statements is True regarding employer-provided qualified retirement plans?

Qualified retirement plans include defined benefit plans but not defined contribution plans.

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

Which of the following statements regarding Roth 401(k) accounts is False?

Which of the following statements regarding contributions to defined contribution plans is True?

Which of the following statements describes how a traditional 401(k) account is similar to a Roth 401(k) account?

Deborah (single, age 29) earned $25,000 in 2018. Deborah was able to contribute $1,800 ($150/month) to her employer sponsored 401(k). What is the total saver's credit that Deborah can claim for 2018? Use Exhibit 13-9

Distributions from defined benefit plans are taxed as long-term capital gains to beneficiaries.

An Introduction to Tax

Tax Compliance, the IRS, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Tax Consequences of Home Ownership

Filters

Exam 13: Retirement Savings and Deferred Compensation

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

When an employer matches an employee's contribution to the employee's 401(k) account, the employee is immediately taxed on the amount of the employer's matching contribution.

In 2018, 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 2018?

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

Taxpayers who participate in an employer-sponsored retirement plan are not allowed to deduct contributions to individual retirement accounts (IRAs) under any circumstances.

Individual 401(k) plans generally have higher contribution limits than SEP IRAs.

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

Which of the following statements is True regarding employer-provided qualified retirement plans?

Qualified retirement plans include defined benefit plans but not defined contribution plans.

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

Which of the following statements regarding Roth 401(k) accounts is False?

Which of the following statements regarding contributions to defined contribution plans is True?

Which of the following statements describes how a traditional 401(k) account is similar to a Roth 401(k) account?

Deborah (single, age 29) earned $25,000 in 2018. Deborah was able to contribute $1,800 ($150/month) to her employer sponsored 401(k). What is the total saver's credit that Deborah can claim for 2018? Use Exhibit 13-9

Distributions from defined benefit plans are taxed as long-term capital gains to beneficiaries.

An Introduction to Tax

Tax Compliance, the IRS, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Tax Consequences of Home Ownership

Filters

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