H&R Block Income Tax Course
.Questions And Answers Verified 100% Correct
Disability Pension - ANSWER A taxable pension from an employer-funded disability
plan or a disability provision of a retirement plan.
Distribution - ANSWER When a person takes or receives money from a retirement
plan.
Pension - ANSWER Generally a series of definitely determinable payments made to a
taxpayer after retirement from work.
Rollover - ANSWER A qualified transfer of funds from one tax-favored account to
another, usually of the same type.
Roth IRA - ANSWER A type of individual retirement arrangement in which contributions
are not tax deductible, earnings grow tax deferred, and qualified withdrawals are tax
free.
Traditional IRA - ANSWER An individual retirement arrangement, contributions to
which may or may not be deductible depending on the taxpayer's AGI and whether or
not he is covered under an employer-sponsored retirement plan.
What is the full retirement age? - ANSWER For workers born before 1938, it is 65. For
those born after it is gradually being increased to 67.
How much of a client's social security and equivalent tier 1 RR benefits may be
,taxable? - ANSWER Up to 85%.
Form SSA-1099 - ANSWER Social Security Benefits
Form RRB-1099 - ANSWER Railroad Retirement Benefits
None of Social Security Benefits Taxable - ANSWER Single, Head of Household,
Qualified Widow - $0-$25,000; Married Filing Jointly - $0-$32,000
Up to 50% of Social Security Benefits Taxable - ANSWER Single, Head of Household,
Qualified Widow - $25,001-$34,000; Married Filing Jointly - $32,001-$44,000
Up to 85% of Social Security Benefits Taxable - ANSWER Single, Head of Household,
Qualified Widow - $34,001+; Married Filing Jointly - $44,001+; Married Filing Single -
$1+
Fully Taxable Pension - ANSWER Pensions to which the taxpayer did not make after-
tax contributions or from which all pre-tax amounts have been recovered in previous
years.
Partly Taxable Pensions - ANSWER Those pensions funded through employer plans to
which the employee contributed some after-tax money.
Form 1099-R - ANSWER Distributions from Pensions, Annuities, Retirement, or Profit-
Sharing Plans, IRAs, Insurance Contracts, Etc.
Distribution Code 1 - ANSWER Early distribution, no known exception to penalty
applies.
Distribution Code 2 - ANSWER Early distribution, exception to penalty applies.
Distribution Code 3 - ANSWER Disability.
Distribution Code 4 - ANSWER Death.
,Distribution Code 7 - ANSWER Normal distribution.
Distribution Code A - ANSWER May qualify for ten-year averaging and/or capital gain
election.
Distribution Code G - ANSWER Direct rollover to a qualified retirement plan,
taxsheltered annuity, 457(b) plan, or IRA, or from a conduit IRA to a qualified plan.
Distribution Code J - ANSWER Early distribution from a Roth IRA, no known exception
to penalty applies.
Distribution Code Q - ANSWER Qualified distribution from a Roth IRA.
Distribution Code T - ANSWER Roth IRA distribution due to death or disability or
taxpayer has reached age 59 1/2, but the payer does not know if the five-year holding
period was met.
Exceptions to the Early Withdrawal Penalty - ANSWER 01 - The distribution was made
to an employee who separated from service during or after the year in which they
reached age 55.
02 - The distribution is part of a series of substantially equal periodic payments, made at
least annually for the life of the participant or the life expenctancy of the participant.
03 - The distribution was made due to permanent and total disability.
04 - The distribution was made due to the death of the employee.
05 - The distribution was made in a year that the taxpayer's medical expenses exceeds
7.5% of AGI.
06 - The distribution was made to an alternate payee under a qualified domestic
relations order.
07 - The distribution was made in a year an unemployed taxpayer paid health insurance
premiums.
08 - The distribution was made to pay qualified higher education expenses for the
taxpayer, spouse, their child, or their grandchild.
09 - The distribution was made to pay qualified first-time, home-buying expenses.
10 - The distribution was made due to an IRS levy of the qualified plan.
, 11 - The distribution was made to a reservist while serving on active duty for at least
180 days.
12 - Other.
Form 5329 - ANSWER Additional Taxes on Qualified Plans and Other Tax-Favored
Accounts
401(k) Plan - ANSWER Deferred compensation plan available through a wide range of
employers. Contributions to a 401(k) plan are tax deferred to the employee.
Distributions from the plan are taxed as ordinary income to the recipient when received.
403(b) Plan - ANSWER Deferred compensation plan available to employees of many
public educational institutions and non-profit organizations.
457 Plan - ANSWER Deferred compensation plan available to employees of many
government entities.
Roth IRA - ANSWER A type of individual arrangement in which contributions are not
tax deductible, earnings grow tax deferred, and qualified withdrawals are tax free.
Traditional IRA - ANSWER An individual retirement arrangement, contributions to
which may or may not be deductible depending on the taxpayer's AGI and whether or
not he is covered under an employer-sponsored retirement plan. Earnings within a
traditional IRA grow tax-deferred. Distributions from a traditional IRA are taxable except
to the extent they represent nondeductible contributions.
Qualified Plan - ANSWER A plan which is eligible for favorable tax treatment because it
meets the requirements of both the following: IRC 401(a); the Employment Retirement
Income Security Act of 1974.
Nonqualified Plan - ANSWER A plan that does not meet the requirements of IRC
401(a) and ERISA and do not qualify for favorable tax treatment.
403(b) Plans - ANSWER A tax-advantaged retirement savings plan available for
.Questions And Answers Verified 100% Correct
Disability Pension - ANSWER A taxable pension from an employer-funded disability
plan or a disability provision of a retirement plan.
Distribution - ANSWER When a person takes or receives money from a retirement
plan.
Pension - ANSWER Generally a series of definitely determinable payments made to a
taxpayer after retirement from work.
Rollover - ANSWER A qualified transfer of funds from one tax-favored account to
another, usually of the same type.
Roth IRA - ANSWER A type of individual retirement arrangement in which contributions
are not tax deductible, earnings grow tax deferred, and qualified withdrawals are tax
free.
Traditional IRA - ANSWER An individual retirement arrangement, contributions to
which may or may not be deductible depending on the taxpayer's AGI and whether or
not he is covered under an employer-sponsored retirement plan.
What is the full retirement age? - ANSWER For workers born before 1938, it is 65. For
those born after it is gradually being increased to 67.
How much of a client's social security and equivalent tier 1 RR benefits may be
,taxable? - ANSWER Up to 85%.
Form SSA-1099 - ANSWER Social Security Benefits
Form RRB-1099 - ANSWER Railroad Retirement Benefits
None of Social Security Benefits Taxable - ANSWER Single, Head of Household,
Qualified Widow - $0-$25,000; Married Filing Jointly - $0-$32,000
Up to 50% of Social Security Benefits Taxable - ANSWER Single, Head of Household,
Qualified Widow - $25,001-$34,000; Married Filing Jointly - $32,001-$44,000
Up to 85% of Social Security Benefits Taxable - ANSWER Single, Head of Household,
Qualified Widow - $34,001+; Married Filing Jointly - $44,001+; Married Filing Single -
$1+
Fully Taxable Pension - ANSWER Pensions to which the taxpayer did not make after-
tax contributions or from which all pre-tax amounts have been recovered in previous
years.
Partly Taxable Pensions - ANSWER Those pensions funded through employer plans to
which the employee contributed some after-tax money.
Form 1099-R - ANSWER Distributions from Pensions, Annuities, Retirement, or Profit-
Sharing Plans, IRAs, Insurance Contracts, Etc.
Distribution Code 1 - ANSWER Early distribution, no known exception to penalty
applies.
Distribution Code 2 - ANSWER Early distribution, exception to penalty applies.
Distribution Code 3 - ANSWER Disability.
Distribution Code 4 - ANSWER Death.
,Distribution Code 7 - ANSWER Normal distribution.
Distribution Code A - ANSWER May qualify for ten-year averaging and/or capital gain
election.
Distribution Code G - ANSWER Direct rollover to a qualified retirement plan,
taxsheltered annuity, 457(b) plan, or IRA, or from a conduit IRA to a qualified plan.
Distribution Code J - ANSWER Early distribution from a Roth IRA, no known exception
to penalty applies.
Distribution Code Q - ANSWER Qualified distribution from a Roth IRA.
Distribution Code T - ANSWER Roth IRA distribution due to death or disability or
taxpayer has reached age 59 1/2, but the payer does not know if the five-year holding
period was met.
Exceptions to the Early Withdrawal Penalty - ANSWER 01 - The distribution was made
to an employee who separated from service during or after the year in which they
reached age 55.
02 - The distribution is part of a series of substantially equal periodic payments, made at
least annually for the life of the participant or the life expenctancy of the participant.
03 - The distribution was made due to permanent and total disability.
04 - The distribution was made due to the death of the employee.
05 - The distribution was made in a year that the taxpayer's medical expenses exceeds
7.5% of AGI.
06 - The distribution was made to an alternate payee under a qualified domestic
relations order.
07 - The distribution was made in a year an unemployed taxpayer paid health insurance
premiums.
08 - The distribution was made to pay qualified higher education expenses for the
taxpayer, spouse, their child, or their grandchild.
09 - The distribution was made to pay qualified first-time, home-buying expenses.
10 - The distribution was made due to an IRS levy of the qualified plan.
, 11 - The distribution was made to a reservist while serving on active duty for at least
180 days.
12 - Other.
Form 5329 - ANSWER Additional Taxes on Qualified Plans and Other Tax-Favored
Accounts
401(k) Plan - ANSWER Deferred compensation plan available through a wide range of
employers. Contributions to a 401(k) plan are tax deferred to the employee.
Distributions from the plan are taxed as ordinary income to the recipient when received.
403(b) Plan - ANSWER Deferred compensation plan available to employees of many
public educational institutions and non-profit organizations.
457 Plan - ANSWER Deferred compensation plan available to employees of many
government entities.
Roth IRA - ANSWER A type of individual arrangement in which contributions are not
tax deductible, earnings grow tax deferred, and qualified withdrawals are tax free.
Traditional IRA - ANSWER An individual retirement arrangement, contributions to
which may or may not be deductible depending on the taxpayer's AGI and whether or
not he is covered under an employer-sponsored retirement plan. Earnings within a
traditional IRA grow tax-deferred. Distributions from a traditional IRA are taxable except
to the extent they represent nondeductible contributions.
Qualified Plan - ANSWER A plan which is eligible for favorable tax treatment because it
meets the requirements of both the following: IRC 401(a); the Employment Retirement
Income Security Act of 1974.
Nonqualified Plan - ANSWER A plan that does not meet the requirements of IRC
401(a) and ERISA and do not qualify for favorable tax treatment.
403(b) Plans - ANSWER A tax-advantaged retirement savings plan available for
