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Chapter 13 Retirement Savings and Deferred Compensation

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Question;Chapter 13;Retirement Savings and Deferred Compensation;True / False Questions;1. Qualified;retirement plans include defined benefit plans but not defined contribution;plans.;True False;2. Defined;benefit plans specify the amount of benefit an employee will receive on;retirement while defined contribution plans specify the amounts that employers;and employees will (or can) contribute to an employee's plan.;True False;3. The;standard retirement benefit an employee will receive under a defined benefit;plan depends on the number of years of service the employee provides, but does;not consider the amount of the employee's compensation near retirement.;True False;4. Jacob;participates in his employer's defined benefit plan. He has worked for his;employer for four full years. If his employer uses a five-year cliff vesting;schedule, Jacob will need to work another year in order to vest in any of his;defined benefit plan retirement benefits.;True False;5. Distributions;from defined benefit plans are taxed as long-term capital gains to;beneficiaries.;True False;6. Taxpayers;withdrawing funds from an IRA before they turn 70? are generally subject to a;10 percent penalty on the amount of the withdrawal.;True False;7. Both;401(k) plans and Roth 401(k) plans are forms of defined contribution plans.;True False;8. Both;employers and employees may contribute to defined contribution plans. However;the amount that employees may contribute to the plan in a given year is limited;by the tax law while the amount that employers may contribute is not.;True False;9. 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.;True False;10. Employees;who are at least 50 years old at the end of the year are allowed to contribute;more to their 401(k) accounts than employees who are not 50 years old by year;end.;True False;11. 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 59? 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.;True False;12. Retired;taxpayers over 59? years of age at the end of the year must receive minimum;distributions from defined contribution plans or they are subject to a penalty.;True False;13. On;December 1, 2014 Irene turned 71 years old. She is still working for her;employer and she participates in her employer's 401(k) plan. Irene is not;required to receive a minimum distribution for 2014 from her 401(k) account;because she has not yet retired.;True False;14. An;employer may contribute to an employee's traditional 401(k) account but the;employer may not contribute to an employee's Roth 401(k) account.;True False;15. Employee;contributions to traditional 401(k) accounts are deductible by the employee;but employee contributions to Roth 401(k) accounts are not.;True False;16. When a;taxpayer receives a nonqualified distribution from a Roth 401(k) account the;taxpayer contributions are deemed to be distributed first. If the amount of the;distribution exceeds the taxpayer contributions, the remainder is from the;account earnings.;True False;17. Just like;distributions from qualified retirement plans, distributions from nonqualified;deferred compensation plans are taxed as ordinary income to the recipient.;True False;18. Participating;in an employer-sponsored nonqualified deferred compensation plan is potentially;risky because employers are not required to fund nonqualified plans. If the;employer is not able to pay the employee when the payment is due, the employee;usually becomes an unsecured creditor of the employer.;True False;19. From a tax;perspective, participating in a nonqualified deferred compensation plan is an;effective tax planning strategy when the employee anticipates that her marginal;tax rate will be higher when she receives the deferred compensation than when;she defers the compensation.;True False;20. Employers;may choose whom they allow to participate and whom they do not allow to;participate in their nonqualified deferred compensation plans.;True False;21. Taxpayers;who participate in an employer-sponsored retirement plan are not allowed to;contribute to individual retirement accounts (IRAs).;True False;22. Taxpayers;who participate in an employer-sponsored retirement plan are not allowed to;deduct contributions to individual retirement accounts (IRAs) under any;circumstances.;True False;23. Darren is;eligible to contribute to a traditional 401(k) in 2014. He forgot to contribute;before year end. If he contributes before April 15, 2015, he is allowed to;treat the contribution as though he made it during 2014.;True False;24. Taxpayers;never pay tax on the earnings of a traditional 401(k) account.;True False;25. Qualifying;distributions from traditional IRAs are nontaxable while qualifying;distributions from Roth IRAs are fully taxable as ordinary income.;True False;26. Taxpayers;contributing to and receiving distributions from a Roth IRA generally earn a;before-tax rate of return on their contributions equal to their after-tax rate;of return.;True False;27. If a;taxpayer's marginal tax rate is decreasing, a taxpayer contributing to a;traditional IRA can earn an after-tax rate of return greater than her;before-tax rate of return.;True False;28. A SEP IRA;is an example of a self-employed retirement account.;True False;29. Individual;401(k) plans generally have higher contribution limits than SEP IRAs.;True False;30. A taxpayer;can only receive a saver's credit if she contributes to a qualified retirement;account.;True False;31. High-income;taxpayers are not allowed to receive the saver's credit.;True False;Multiple Choice Questions;32. Which of;the following statements is true regarding employer-provided qualified;retirement 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.;33. Which of;the following describes a defined benefit plan?;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;34. Which of;the following statements regarding defined benefit plans is false?;A. The;benefits are based on a fixed formula;B. The;vesting period can be based on a graded or cliff schedule;C. Employees;bear the investment risks of the plan;D. Employers;are generally required to make annual contributions to meet expected future;liabilities;35. Which of;the following statements regarding vesting in a defined benefit plan is;correct?;A. Under a;cliff vesting schedule, a portion of an employee's benefits vest each year.;B. Under a;graded vesting schedule, an employee's entire benefit vests all at the same;time.;C. When an;employee's benefits vest, she is entitled to participate in the employer's;defined benefit plan.;D. When an;employee's benefits vest, she is legally entitled to receive the vested;benefits.;36. Dean has;earned $70,000 annually for the past five years working as an architect for MWC;Inc. Under MWC's defined benefit plan (which uses a 7-year graded vesting;schedule) employees earn a benefit equal to 3.5% of the average of their three;highest annual salaries for every full year of service with MWC. Dean has;worked for five full years for MWC and his vesting percentage is 60%. What is;Dean's vested benefit (or annual retirement benefit he has earned so far)?;A. $12,250;B. $42,000;C. $7,350;D. $0;37. Dean has;earned $70,000 annually for the past 4? years working as an architect for MWC.;Under MWC's defined benefit plan (which uses a 5-year cliff vesting schedule);employees earn a benefit equal to 3.5% of the average of their three highest;annual salaries for every full year of service with MWC. What is Dean's vested;benefit (or annual benefit he has earned so far)?;A. $12,250;B. $42,000;C. $7,350;D. $0;38. Which of;the following best describes distributions from a defined benefit plan?;A. Distributions;from defined benefit plans are fully taxable as ordinary income.;B. Distributions;from defined benefit plans are partially taxable as ordinary income and;partially nontaxable as a return of capital.;C. Distributions;from defined benefit plans are fully taxable as capital gains.;D. Distributions;from defined benefit plans are partially taxable as capital gains and partially;nontaxable as a return of capital.;39. Which of;the following is a true statement regarding saving for retirement?;A. In a;given year, a taxpayer may participate in either an employer-sponsored defined;benefit plan or defined contribution plan but not both.;B. In a;given year, a taxpayer who receives salary as an employee and also receives;self-employment income may participate in an employer-sponsored defined;contribution plan or may contribute to a self-employed retirement account but;not both.;C. In a;given year, a taxpayer may contribute to an IRA (either traditional or Roth) or;contribute to a self-employment retirement account but not both.;D. None of;these is a true statement;40. Which of;the following describes a defined contribution plan?;A. Provides;guaranteed income on retirement to plan participants.;B. Employers;and employees generally may contribute to the plan.;C. Generally;set up to defer income for executives and highly compensated employees but not;other employees.;D. Retirement;account set up to provide an individual a fixed amount of income on retirement.;41. Which of;the following statements regarding defined contribution plans is false?;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.;42. Which of;the following statements regarding contributions to defined contribution plans;is true?;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.;43. When;employees contribute to a traditional 401(k) plan, they _____ allowed to deduct;the contributions and they ______ taxed on distributions from the plan.;A. are, are;not;B. are, are;C. are not;are;D. are not;are not;44. When;employees contribute to a Roth 401(k) account, they _____ allowed to deduct the;contributions and they _______ taxed on distributions from the plan.;A. are, are;not;B. are, are;C. are not;are;D. are not;are not;45. How is a;traditional 401(k) account similar to a Roth 401(k) account?;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;46. Which of;the following best describes distributions from a traditional defined;contribution plan?;A. Distributions;from defined contribution plans are fully taxable as ordinary income.;B. Distributions;from defined contribution plans are partially taxable as ordinary income and;partially nontaxable as a return of capital.;C. Distributions;from defined contribution plans are fully taxable as capital gains.;D. Distributions;from defined contribution plans are partially taxable as capital gains and;partially nontaxable as a return of capital.;47. Shauna;received a distribution from her 401(k) account this year. In which of the;following situations will Shauna be subject to an early distribution penalty?;A. Shauna is;60 years of age but not yet retired when she receives the distribution.;B. Shauna is;58 years of age but not yet retired when she receives the distribution.;C. Shauna is;56 years of age and retired when she receives the distribution.;D. Shauna is;69 years of age but not yet retired when she receives the distribution.;48. Shauna;received a $100,000 distribution from her 401(k) account this year. Assuming;Shauna's marginal tax rate is 25%, what is the total amount of tax and penalty;Shauna will be required to pay if she receives the distribution on her 59th;birthday and she has not yet retired?;A. $0.;B. $10,000.;C. $25,000.;D. $35,000.;E. None of;these.;49. Riley;participates in his employer's 401(k) plan. He retired in 2014 at age 75. When;must Riley receive his distribution pertaining to 2014 to avoid minimum;distribution penalties?;A. April 1;2014;B. April 1;2015;C. December;31, 2014;D. December;31, 2015;50. Riley;participates in his employer's 401(k) plan. He turns 70 years of age on;February 15, 2013 and he plans on retiring on July 1, 2015. When must Riley;receive his first distribution from the plan to avoid minimum distribution penalties?;A. by April;1, 2013;B. by April;1, 2014;C. by April;1, 2015;D. by April;1, 2016;51. Riley;participates in his employer's 401(k) plan. He turns 69 years of age on;February 15, 2014, and he plans on retiring on July 1, 2014. When must Riley;receive his first distribution from the plan to avoid minimum distribution;penalties?;A. by April;1, 2014;B. by April;1, 2015;C. by April;1, 2016;D. by April;1, 2017;52. Which of;the following statements is true regarding taxpayers receiving distributions;from traditional defined contribution plans?;A. A;taxpayer who retires at age 71 in 2014 is required to pay a minimum;distribution penalty if she does not receive a distribution in 2014.;B. The;minimum distribution penalty is 30% of the amount required to have been;distributed.;C. A;taxpayer who receives a distribution from a retirement account before she is 55;years old is subject to a 10% penalty on both the distributed and undistributed;portions of her retirement account.;D. Taxpayers;are not allowed to deduct either early distribution penalties or minimum;distribution penalties.;53. Jenny (35;years old) is considering making a one-time contribution to either a;traditional 401(k) plan or to a Roth 401(k) plan. She plans to withdraw the;account balance when she retires in 40 years. Jenny expects to earn a 7%;before-tax rate of return no matter which plan she contributes to. Which of the;following statements is true?;A. If;Jenny's marginal tax rate in the year of contribution is higher than her;marginal tax rate in the year of distribution, she will earn a higher after-tax;rate of return on the traditional 401(k) plan than on the Roth 401(k) plan.;B. If;Jenny's marginal tax rate in the year of contribution is lower than her;marginal tax rate in the year of distribution, she will earn a higher after-tax;rate of return on the traditional 401(k) plan than on the Roth 401(k) plan.;C. Jenny;will earn the same after-tax rate of return no matter which plan she;contributes to.;D. Jenny is;not allowed to make a one-time contribution to either plan.;54. Which of;the following statements regarding Roth 401(k) accounts is false?;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.;55. Which of;the following statements is true regarding distributions from Roth 401(k);accounts?;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;these is a true statement.;56. Heidi has;contributed $20,000 in total to her Roth 401(k) account over a six year period.;In 2014, when her account was worth $50,000 and Heidi was in desperate need of;cash, Heidi received a $30,000 nonqualified distribution from the account. How;much of the distribution will be subject to income tax and 10% penalty?;A. $0;B. $10,000;C. $12,000;D. $18,000;E. $30,000;57. Which of;the following is true concerning employer funding of nonqualified deferred;compensation plans?;A. Employers;are required to invest salary deferred by employees in investments specified by;the employees.;B. Employers;are required to annually fund their deferred compensation obligations to;employees.;C. Employers;annually deduct the amount earned by employees under the plan.;D. Employers;may discriminate in terms of who they allow to participate in the plan.;58. Which of;the following statements concerning nonqualified deferred compensation plans is;true?;A. If an;employer doesn't have the funds to pay the employee, the employee becomes an;unsecured creditor of the employer.;B. These;plans can be an important tax planning tool for employers if they expect their;marginal tax rate to decrease over time.;C. These;plans can be an important tax planning tool for employees who expect their;marginal tax rate to increase over time.;D. Distributions;are taxed at the same tax rate as long-term capital gains.;59. Which of;the following statements comparing qualified defined contribution plans and;nonqualified deferred compensation plans is false?;A. Employers;must fund qualified defined contribution plans but not nonqualified deferred;compensation plans.;B. Qualified;defined contribution plans are subject to formal vesting requirements while;nonqualified deferred compensation plans are not.;C. Distributions;from both types of plans are taxed at ordinary income tax rates.;D. In terms;of tax consequences to the employee, earnings on qualified plans (except Roth;plans) are deferred until distributed to the employee but earnings on;nonqualified plans are immediately taxable.;60. During;2014 Jacob, a 19 year old full-time student, earned $4,500 during the year and;was not eligible to participate in an employer-sponsored retirement plan. The;general limit for deductible contributions during 2014 is $5,500. How much of a;tax-deductible contribution can Jacob make to an IRA?;A. $0;(Full-time students are not allowed to participate in IRAs);B. $500;C. $4,500;D. $5,500;61. Which of;the following statements regarding traditional IRAs is true?;A. Once a;taxpayer reaches age 55 years of age she is allowed to contribute an additional;$1,000 a year.;B. Taxpayers;with high income are not allowed to contribute to traditional IRAs.;C. Taxpayers;who participate in an employer-sponsored retirement plan are allowed to deduct;contributions to a traditional IRA regardless of their AGI.;D. A single;taxpayer with no earned income is not allowed to deduct contributions to;traditional IRAs.;62. Which of;the following statements regarding IRAs is false?;A. Taxpayers;who participate in an employer-sponsored retirement plan may be allowed to make;deductible contributions to a traditional IRA.;B. The;ability to make deductible contributions to a traditional IRA and nondeductible;contributions to a Roth IRA may be subject to phase-out based on AGI.;C. A;taxpayer may contribute to a traditional IRA in 2015 but deduct the;contribution in 2014.;D. Taxpayers;who have made nondeductible contributions to a traditional IRA are taxed on the;full proceeds when they receive distributions from the IRA.;63. Bryan, who;is 45 years old, had some surprise medical expenses during the year. To pay for;these expenses (which were claimed as itemized deductions on his tax return);he received a $20,000 distribution from his traditional IRA (he has only made;deductible contributions to the IRA). Assuming his marginal ordinary income tax;rate is 15%, what amount of taxes and/or early distribution penalties will;Bryan be required to pay on this distribution?;A. $3,000;income tax, $2,000 early distribution penalty;B. $3,000;income tax, $0 early distribution penalty;C. $0 income;tax, $2,000 early distribution penalty;D. $0 income;tax, $0 early distribution penalty;64. In 2014;Jessica retired at the age of 65. The current balance in her traditional IRA;was $200,000. Over the years, Jessica had made $20,000 of nondeductible;contributions and $60,000 of deductible contributions to the account. If;Jessica receives a $50,000 distribution from the IRA, what amount of the;distribution is taxable?;A. $0;B. $5,000;C. $37,500;D. $45,000;E. $50,000;65. Which of;the following statements regarding Roth IRAs is false?;A. Contributions;to Roth IRAs are not deductible.;B. Qualifying;distributions from Roth IRAs are not taxable.;C. Whether;or not they participate in an employer-sponsored retirement plan, taxpayers are;allowed to contribute to Roth IRAs as long as their AGI does not exceed certain;thresholds.;D. Taxpayers;who are married and file separately are not allowed to contribute to a Roth;IRA.;66. Which of;the following statements regarding Roth IRAs distributions is true?;A. A;distribution is not a qualifying distribution unless the distribution is at;least two years after the taxpayer has opened the Roth IRA.;B. A;taxpayer receiving a distribution from a Roth IRA before reaching the age of 55;is generally not subject to an early distribution penalty.;C. A Roth;IRA does not have minimum distribution requirements.;D. The full;amount of all nonqualifying distributions is subject to tax at the taxpayer's;marginal tax rate.;67. Daniela;retired at the age of 65. The current balance in her Roth IRA is $200,000.;Daniela established the Roth IRA 10 years ago. Through a rollover and annual;contributions Daniela has contributed $80,000 to her account. If Daniela;receives a $50,000 distribution from the Roth IRA, what amount of the;distribution is taxable?;A. $0;B. $20,000;C. $30,000;D. $50,000;68. Lisa, age;45, needed some cash so she received a $50,000 distribution from her Roth IRA.;At the time of the distribution, the balance in the Roth IRA was $200,000. Lisa;established the Roth IRA 8 years ago. Through a rollover and annual;contributions, she has contributed $80,000 to her account. What amount of the;distribution is taxable and subject to early distribution penalty?;A. $0;B. $20,000;C. $30,000;D. $50,000;69. Lisa, age;45, needed some cash so she received a $50,000 distribution from her Roth IRA.;At the time of the distribution, the balance in the Roth IRA was $200,000. Lisa;established the Roth IRA 10 years ago. Over the years, she has contributed;$20,000 to her account. What amount of the distribution is taxable and subject;to early distribution penalty?;A. $0;B. $5,000;C. $30,000;D. $50,000;70. Tyson (48;years old) owns a traditional IRA with a current balance of $50,000. The;balance consists of $30,000 of deductible contributions and $20,000 of account;earnings. Convinced that his marginal tax rate will increase in the future;Tyson receives a distribution of the entire $50,000 balance of his traditional;IRA and he immediately contributes the $50,000 to a Roth IRA. Assuming his;marginal tax rate is 25%, what amount of penalty, if any, must Tyson pay on the;distribution from the traditional IRA?;A. $0.;B. $1,250.;C. $3,750.;D. $5,000.;71. Tyson (48;years old) owns a traditional IRA with a current balance of $50,000. The;balance consists of $30,000 of deductible contributions and $20,000 of account;earnings. Tyson's marginal tax rate is 25%. Convinced that his marginal tax;rate will increase in the future, Tyson receives a distribution of the entire;$50,000 balance of his traditional IRA. He retains $12,500 to pay tax on the;distribution and he contributes $37,500 to a Roth IRA. What amount of income;tax and penalty must Tyson pay on this series of transactions?;A. $0 income;tax, $0 penalty.;B. $12,500;income tax, $1,250 penalty.;C. $12,500;income tax, $3,000 penalty.;D. $12,500;income tax, $5,000 penalty.;72. Which of;the following statements concerning traditional IRAs and Roth IRAs is true?;A. A;taxpayer may contribute to a Roth IRA at any age but a taxpayer is not allowed;to contribute to a traditional IRA after reaching 70? years of age.;B. The annual;contribution limits for a traditional IRA and Roth IRA are the same.;C. Taxpayers;with high income are allowed to contribute to traditional IRAs but not to Roth;IRAs.;D. All of;these are true statements.;73. Which of;the following is not a self-employed retirement account?;A. SEP IRA;B. SEM;403(c);C. Individual;401(k);D. None of;these. All of these are self-employed retirement accounts.;74. In;general, which of the following statements regarding self-employed retirement;accounts is true?;A. 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. SEP IRAs;have higher contribution limits than individual 401(k)s no matter the age of;the contributing taxpayer.;C. Individual;401(k)s have higher contribution limits than SEP IRAs.;D. None of;these. Both SEP IRAs and individual 401(k)s have exactly the same annual;contribution limits.;75. Which of;the following statements regarding self-employed retirement accounts is true?;A. A;self-employed taxpayer who has hired employees may not set up a SEP IRA.;B. A;self-employed taxpayer who has hired employees may set up either a SEP IRA or;an individual 401(k).;C. A;self-employed taxpayer who has hired employees may not set up an individual;401(k).;D. All of;these statements are false.;76. Which of;the following is true concerning SEP IRAs?;A. SEP IRAs;are difficult to set up and have high administrative costs;B. Taxpayers;may contribute unlimited amounts to SEP IRAs;C. Employees;of the taxpayer cannot be included in SEP IRAs;D. Taxpayers;with a SEP IRA must contribute for their employees;77. Which of;the following statements concerning individual 401(k)s is false?;A. In;general, individual 401(k)s have higher administrative costs than SEP IRAs.;B. Employees;cannot participate in individual 401(k)s.;C. Individual;401(k)s are available only to self-employed taxpayers with 100 or fewer;employees.;D. Individual;401(k)s have contribution limitations.;78. Kathy is;60 years of age and self-employed. During 2014 she reported $100,000 of;revenues and $40,000 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 simplified employee pension (SEP) IRA for 2014?;A. $11,152;B. $16,652;C. $57,500;D. $52,000;79. Kathy is;48 years of age and self-employed. During 2014 she reported $100,000 of;revenues and $40,000 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 simplified employee pension (SEP) IRA for 2014?;A. $11,152;B. $16,652;C. $57,500;D. $52,000;80. Kathy is;60 years of age and self-employed. During the year she reported $400,000 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 this year to a simplified employee pension (SEP) IRA?;A. $52,000;B. $57,500;C. $57,746;D. $288,729;81. Kathy is;60 years of age and self-employed. During the year she reported $100,000 of;revenues and $40,000 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)?;A. $28,652;B. $34,152;C. $52,000;D. $57,500;82. Kathy is;48 years of age and self-employed. During the year she reported $100,000 of;revenues and $40,000 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)?;A. $11,152;B. $16,652;C. $28,652;D. $52,000;83. Kathy is;60 years of age and self-employed. During the year she reported $400,000 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)?;A. $52,000;B. $57,500;C. $75,246;D. $57,746;84. Kathy is;48 years of age and self-employed. During the year she reported $400,000 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)?;A. $52,000;B. $57,500;C. $75,246;D. $79,787;85. Which of;the following taxpayers is most likely to qualify for the saver's credit?;A. A low AGI;taxpayer who does not contribute to any qualified retirement plan.;B. A low AGI;taxpayer who contributes to her employer's 401(k) plan.;C. A high;AGI self-employed taxpayer.;D. A high;AGI employee who does not contribute to any qualified retirement plan.;86. Amy is;single. During 2014, 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?;A. $1,250;B. $2,500;C. $1,000;D. $0;87. Amy is;single. During 2014, she determined her adjusted gross income was $12,000.;During the year, Amy also contributed $1,500 to a Roth IRA. What is the maximum;saver's credit she may claim for the year?;A. $750;B. $1,000;C. $1,500;D. $0;88. Amy files;as a head of household. She determined her 2014 adjusted gross income was;$70,000. During the year, she contributed $2,500 to a Roth IRA. What is the;maximum saver's credit she may claim for 2014?;A. $1,000;B. $2,000;C. $2,500;D. $1,250;E. $0;89. What is;the maximum saver's credit available to any taxpayer in 2014?;A. $2,000;B. $1,000;C. $500;D. It;depends on the filing status of the taxpayer;Essay Questions;90. Joan;recently started her career with PDEK Accounting, LLP which provides a defined;benefit plan for all employees. Employees receive 1.5 percent of the average of;their three highest annual salaries for each full year of service. Plan;benefits vest under a 5-year cliff schedule. Joan worked 4? years at PDEK;before leaving for another opportunity. She received an annual salary of;$49,000, $52,000, $58,000 and $65,000 for years one through four, respectively.;Joan earned $35,000 of her $70,000 annual salary in year five. What is the;vested benefit Joan is entitled to receive from PDEK for her retirement?;91. Joan;recently started her career with PDEK Accounting, LLP which provides a defined;benefit plan for all employees. Employees receive 1.5 percent of the average of;their three highest annual salaries for each full year of service. Plan;benefits vest under a 5-year cliff schedule. Joan worked 5? years at PDEK;before leaving for another opportunity. She received an annual salary of;$49,000, $52,000, $58,000, $65,000, and $75,000 for years one through five;respectively. Joan earned $40,000 of her $80,000 annual salary in year six.;What is the vested benefit Joan is entitled to receive from PDEK for her;retirement?;92. Henry has;been working for Cars Corp. for 40 years and 4 months. Cars Corp. provides a;defined benefit plan for its employees. Under the plan, employees receive 2;percent of the average of their three highest annual salaries for each full;year of service. Henry's vested benefit percentage is 80 percent (40 years ? 2;percent for each full year). Henry retired on January 1, 2014 Henry received;annual salaries of $520,000, $540,000, and $560,000 for 2011, 2012, and 2013;respectively. What is the maximum benefit Henry can receive under the plan in;2014?;93. Georgeanne;has been employed by SEC Corp. for the last 2? years. Georgeanne participates;in SEC's 401(k) plan. During her employment, Georgeanne has contributed $6,000;to her 401(k) account. SEC has contributed $3,000 to Georgeanne's 401(k);account (it matched 50 cents of every dollar contributed). SEC uses a three-year;cliff vesting schedule. If Georgeanne were to quit her job with SEC, what would;be her vested

 

Paper#38062 | Written in 18-Jul-2015

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