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

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Question 61

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Which of the following is true regarding an SEP?

A) Cannot discriminate in favor of highly compensated employees.
B) Deductible contributions cannot exceed the lower of 15% of the employee's compensation or $53,000.
C) Self-employed individuals cannot create and contribute to an SEP.
D) The plan must cover all employees who have reached the age of 18, who have worked for the employer for at least two of the preceding five years, and who received at least $600 in compensation.

E) All of the above
F) C) and D)

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Question 62

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In the case of defined-contribution plans, in 2015 what are the maximum contribution limits by an employee under the age of 50 to a qualified pension plan, a 401(k) plan, a Keogh plan, SEP, and SIMPLE plan?

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• Qualified pension plan = the lesser of...

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Question 63

Multiple Choice

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Which of the following statements is incorrect?

In 2015, a 52-year-old participant in a 401(k) plan may contribute a maximum of:

A stream of payments can be called an annuity.

Heather, age 67, retired in 2015. During the year she received distributions of $14,000 from her IRA. She made nondeductible contributions of $40,000 to the IRA in prior years and has never received a nontaxable distribution. As of December 31, 2015, the value of her IRA was $250,000. Calculate the taxable portion of Heather's distribution and her tax basis in the IRA after the distribution that she will carry forward to 2016.

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

Pension plan distributions are reported to taxpayers on a Form 1099-P.

Roth IRA withdrawals are deemed to first come from contributions followed by earnings.

Employers with 200 or fewer employees who do not have a qualified pension or profit-sharing plan can establish a SIMPLE retirement plan for their employees.

Which of the following statements is incorrect?

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 51, who is an active participant in an employer-sponsored retirement plan with AGI of $37,000. b. A single person, age 59, who is an active participant in an employer-sponsored retirement plan with AGI of $67,000. c. A single person, age 26, who is an active participant in an employer-sponsored retirement plan with AGI of $63,000.

All tax-deferred pension plans have an accumulation period and a distribution period.

An annuity is a series of payments made pursuant to a contract.

Retirement accounts include traditional IRAs, Roth IRAs, Keoghs, and Coverdell Education Savings Accounts.

Which of the following is not an employer-sponsored retirement plan?

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 2015?

To calculate the taxable portion of an annuity payment, a taxpayer must determine all of the following except:

Godfrey is age 77. He paid $240,000 for a single life annuity contract that will pay him $28,800 per year for life. The taxable amount of the first $28,800 payment is

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