Question 1

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

Accepted Answer

A) Distributions from defined contribution plans are fully taxable to the recipient as ordinary income. 
B) Distributions from defined contribution plans are partially taxable to the recipient as ordinary income and partially nontaxable as a return of capital. 
C) Distributions from defined contribution plans are fully taxable to the recipient as long-term capital gains. 
D) Distributions from defined contribution plans are partially taxable to the recipient as capital gains and partially nontaxable as a return of capital. 
A) Distributions from defined contribution plans are fully taxable to the recipient as ordinary income. 
B) Distributions from defined contribution plans are partially taxable to the recipient as ordinary income and partially nontaxable as a return of capital. 
C) Distributions from defined contribution plans are fully taxable to the recipient as long-term capital gains. 
D) Distributions from defined contribution plans are partially taxable to the recipient as capital gains and partially nontaxable as a return of capital.

Question 2

Kathy is 60 years of age and self-employed. During 2020 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 a SEP IRA for 2020?Assume she pays $27,787 in self-employment for 2020. (Round your final answer to the nearest whole number.)

Accepted Answer

A) $57,000. 
B) $63,500. 
C) $77,221. 
D) $372,213. 
A) $57,000. 
B) $63,500. 
C) $77,221. 
D) $372,213.

Question 3

Retired taxpayers over 59½ years of age at the end of the year must receiverequired minimum distributions from defined contribution plans or they are subject to a penalty.

Accepted Answer

A) True 
 B)False

Question 4

Kathy is 60 years of age and self-employed. During 2020, 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)for 2020? Assume she pays $27,787 in self-employment for 2020. (Round your final answer to the nearest whole number.)

Accepted Answer

A) $57,000. 
B) $63,500. 
C) $96,721. 
D) $77,221. 
A) $57,000. 
B) $63,500. 
C) $96,721. 
D) $77,221.

Question 5

In general, which of the following statements regarding self-employed retirement accounts is true?

Accepted Answer

A) In general, SEP IRAs have higher contribution limits than individual 401(k)s if the contributing taxpayer is at least 50 years of age at year-end. 
B) In general, SEP IRAs have higher contribution limits than individual 401(k)s no matter the age of the contributing taxpayer. 
C) In general, individual 401(k)s have higher contribution limits than SEP IRAs. 
D) None of the choices are true. In general, both SEP IRAs and individual 401(k)s have exactly the same annual contribution limits. 
A) In general, SEP IRAs have higher contribution limits than individual 401(k)s if the contributing taxpayer is at least 50 years of age at year-end. 
B) In general, SEP IRAs have higher contribution limits than individual 401(k)s no matter the age of the contributing taxpayer. 
C) In general, individual 401(k)s have higher contribution limits than SEP IRAs. 
D) None of the choices are true. In general, both SEP IRAs and individual 401(k)s have exactly the same annual contribution limits.

Question 6

Sean (age 71 at end of 2020)retired five years ago. The balance in his 401(k)account on December 31, 2019, was $1,720,000 and the balance in his account on December 31, 2020, was $1,775,000. Using the Treasury table below, what is Sean's required minimum distribution for 2020?

Accepted Answer

For 2020, his required minimum distribut

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) Employers bear investment risk relating to the plan. 
B) Employees immediately vest in their contributions to the plan. 
C) Employers typically match employee contributions to the plan to some extent. 
D) An employer's vesting schedule is used for employers' contributions in determining the amount of the plan benefits the employee is entitled to receive on retirement. 
A) Employers bear investment risk relating to the plan. 
B) Employees immediately vest in their contributions to the plan. 
C) Employers typically match employee contributions to the plan to some extent. 
D) An employer's vesting schedule is used for employers' contributions in determining the amount of the plan benefits the employee is entitled to receive on retirement.

Question 9

Sean (age 70 at end of 2020)retired five years ago. The balance in his 401(k)account on December 31, 2019, was $2,080,000 and the balance in his account on December 31, 2020, was $2,140,000. In 2020, Sean received a distribution of $60,000 from his 401(k)account. Assuming Sean's marginal tax rate is 25 percent, what amount of the $60,000 distribution will Sean have left after paying income tax on the distribution and paying any minimum distribution penalties (use the Treasury table below in determining the required minimum distribution penalty, if any).

Accepted Answer

${{[a(11)]:#,###}} remaining after taxes

Question 10

Dean has earned $73,250 annually for the past six years working as an architect for WCC Incorporated Under WCC's defined benefit plan (which uses a seven-year graded vesting schedule)employees earn a benefit equal to 4.0 percent of the average of their three highest annual salaries for every full year of service with WCC. Dean has worked for six full years for WCC and his vesting percentage is 80 percent. What is Dean's vested benefit (or annual retirement benefit he has earned so far)?

Accepted Answer

A) $17,580. 
B) $58,600. 
C) $14,064. 
D) $0. 
A) $17,580. 
B) $58,600. 
C) $14,064. 
D) $0.

Question 11

Amy is single. During 2020, she determined her adjusted gross income was $12,000. During the year, Amy also contributed $2,500 to a Roth IRA. What is the maximum saver's credit she may claim for the year?

Accepted Answer

A) $1,250. 
B) $2,500. 
C) $1,000. 
D) $0. 
A) $1,250. 
B) $2,500. 
C) $1,000. 
D) $0.

Question 12

Which of the following is not a self-employed retirement account?

Accepted Answer

A) SEP IRA. 
B) SERA 403(c). 
C) Individual 401(k). 
D) None of the choices are correct. All of these choices are self-employed retirement accounts. 
A) SEP IRA. 
B) SERA 403(c). 
C) Individual 401(k). 
D) None of the choices are correct. All of these choices are self-employed retirement accounts.

Question 13

Heidi (age 57)invested $4,000 in her Roth 401(k)on January 1, 2012. This was her only contribution to the account. On July 1, 2020, when the account balance was $6,000, she received a nonqualified distribution of $4,500 (not a coronavirus-related distribution). 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 14

Tatia, age 38, has made deductible contributions to her traditional IRA over the past few years. When her account balance was $30,000, she received a distribution of the entire $30,000 balance of her traditional IRA. She retained $5,000 of the distribution to help her pay the taxes due from the distribution and she immediately contributed the remaining $25,000 to a Roth IRA. What amount of tax and early distribution penalty is she required to pay on the $30,000 distribution from the traditional IRA if her marginal tax rate is 25 percent?

Accepted Answer

$7,500 income tax; $500 early distributi

Question 15

Which of the following describes a defined benefit plan?

Accepted Answer

A) Provides fixed income to the plan participants based on a formula. 
B) Distribution amounts determined by employee and employer contributions. 
C) Allows executives to defer income for a period of years. 
D) Retirement account set up by an individual. 
A) Provides fixed income to the plan participants based on a formula. 
B) Distribution amounts determined by employee and employer contributions. 
C) Allows executives to defer income for a period of years. 
D) Retirement account set up by an individual.

Question 16

Kathy is 60 years of age and self-employed. During 2020 she reported $512,000 of revenues and $106,000 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 a SEP IRA for 2020?Assume she pays $27,600 in self-employment for 2020. (Round your final answer to the nearest whole number.)

Accepted Answer

A) $57,000. 
B) $63,500. 
C) $78,440. 
D) $378,400. 
A) $57,000. 
B) $63,500. 
C) $78,440. 
D) $378,400.

Question 17

Darren is eligible to contribute to a traditional 401(k)in 2020. He forgot to contribute before year-end. If he contributes before April 15, 2021, he is allowed to treat the contribution as though he made it during 2020.

Accepted Answer

A) True 
 B)False

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

Retired taxpayers over 59½ years of age at the end of the year must receiverequired minimum distributions from defined contribution plans or they are subject to a penalty.

In general, which of the following statements regarding self-employed retirement accounts is true?

Sean (age 71 at end of 2020)retired five years ago. The balance in his 401(k)account on December 31, 2019, was $1,720,000 and the balance in his account on December 31, 2020, was $1,775,000. Using the Treasury table below, what is Sean's required minimum distribution for 2020?

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

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

Amy is single. During 2020, she determined her adjusted gross income was $12,000. During the year, Amy also contributed $2,500 to a Roth IRA. What is the maximum saver's credit she may claim for the year?

Which of the following is not a self-employed retirement account?

Which of the following describes a defined benefit plan?

Darren is eligible to contribute to a traditional 401(k)in 2020. He forgot to contribute before year-end. If he contributes before April 15, 2021, he is allowed to treat the contribution as though he made it during 2020.

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

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Exam 13: Retirement Savings and Deferred Compensation

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

Retired taxpayers over 59½ years of age at the end of the year must receiverequired minimum distributions from defined contribution plans or they are subject to a penalty.

In general, which of the following statements regarding self-employed retirement accounts is true?

Sean (age 71 at end of 2020)retired five years ago. The balance in his 401(k)account on December 31, 2019, was $1,720,000 and the balance in his account on December 31, 2020, was $1,775,000. Using the Treasury table below, what is Sean's required minimum distribution for 2020?

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

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

Amy is single. During 2020, she determined her adjusted gross income was $12,000. During the year, Amy also contributed $2,500 to a Roth IRA. What is the maximum saver's credit she may claim for the year?

Which of the following is not a self-employed retirement account?

Which of the following describes a defined benefit plan?

Darren is eligible to contribute to a traditional 401(k)in 2020. He forgot to contribute before year-end. If he contributes before April 15, 2021, he is allowed to treat the contribution as though he made it during 2020.

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