CH.14: Group Health Insurance Exam Questions with Correct Verified Solutions Assured A+ Pass Guaranteed!!||ALREADY GRADED!!!

CH.14: Group Health Insurance Exam Questions with Correct Verified Solutions Assured A+ Pass Guaranteed!!||ALREADY GRADED!!! An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee? -Distribution is subject to capital gains tax -Distribution is subject to ordinary income tax -Distribution is subject to a tax penalty -Distribution is subject to federal income tax withholding - ANSWER distribution is subject to federal income tax withholding What does a 401(k) plan generally provide its participants? Tax-free distributions Salary-deferral distributions Salary-deferral contributions A defined retirement benefit - ANSWER salary-deferral contributions In a qualified retirement plan, the yearly contributions to an employee's account -are not tax-deductible -are restricted to minimum levels set by the IRS -are restricted to maximum levels set by the IRS -must be matched dollar-for-dollar by the employer - ANSWER are restricted to maximum levels set by the IRS At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in -Only income tax on the amount withdrawn -Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan -Continued tax-free accumulations in the bank savings account -Only a 10% penalty on the withdrawal of funds - ANSWER income tax and 10% penalty assessed upon funds withdrawn from the Qualified Plan Which plan is intended to be used by a sole proprietor and the employees of that business? SEP Plan Keogh Plan Individual Retirement Account (IRA) SIMPLE Plan - ANSWER Keogh Plan Post-tax dollar contributions are found in 401K investments Traditional IRA investments SIMPLE investments Roth IRA investments - ANSWER Roth IRA investments Which of these retirement plans can be started by an employee, even if another plan is in existence? Individual Retirement Account (IRA) Defined plan Keogh plan 403(b) plan - ANSWER individual retirement account (IRA) An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age? 70 1/2 65 55 59 1/2 - ANSWER 59 1/2 Who is normally considered to be the owner of a 403(b) tax-sheltered annuity? The 403(b) custodian The financial institution The employer The employee - ANSWER the employee A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid -mandatory income tax withholding on the transfer amount -paying transfer fees -paying trustee fees -ever paying income taxes on the distributions - ANSWER mandatory income tax withholding on the transfer amount An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable? No deduction allowed $25,000 $20,000 $10,000 - ANSWER $25,000 Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2? -10% tax penalty for early withdrawal -Capital gains tax -Ordinary income tax and a 10% tax penalty for early withdrawal -Ordinary income tax - ANSWER ordinary income tax and 10% tax penalty for early withdrawal An employer that offers a qualified retirement plan to its employees is eligible to -avoid ERISA regulations -make tax-deductible contributions to the plan -make tax deductible contributions to key employees only -make partial tax-deductible contributions to the plan - ANSWER make tax-deductible contributions to the plan An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction? 10% is withheld for income taxes 20% is withheld for income taxes 30% is withheld for income taxes Nothing is withheld - ANSWER 20% is withheld for income taxes