FFL Life Course Retirement Plans
This flashcard tests your knowledge of retirement options for small businesses: specifically, the Keogh Plan, which is designed for sole proprietors (and their employees) and offers both defined‑benefit and defined‑contribution structures—unlike SIMPLE, SEP, or IRAs, which have different eligibility and design features
Which plan is intended to be used by a sole proprietor and the employees of that business?
<> Keogh Plan
<> SIMPLE Plan
<> SEP Plan
<> Individual Retirement Account (IRA)
Key Terms
Which plan is intended to be used by a sole proprietor and the employees of that business?
<> Keogh Plan
<> SIMPLE Plan
<> SEP Plan
<> Individual Retirement Account (IRA)
Keogh Plan
~ A Keogh Plan may be used by a sole proprietor only if the employees of the...
In a qualified retirement plan, the yearly contributions to an employee’s account:
<> are restricted to minimum levels set by the IRS
<> must be matched dollar-for-dollar by the employer
<> are restricted to maximum levels set by the IRS
<> are not tax-deductible
are restricted to maximum levels set by the IRS
~ Annual limits to an employee’s qualif...
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
<> Ordinary income tax and a 10% tax penalty for early withdrawal
<> Ordinary income tax
<> Capital gains tax
<> 10% tax penalty for early withdrawal
Ordinary income tax and a 10% tax penalty
~ Income tax and a penalty tax are generally assessed when a participant receives retirement savings f...
An individual participant personally received eligible rollover funds from a profit-sharing plan. What are the income tax withholding requirements for this transaction?
<> 20% is withheld for income taxes
<> 30% is withheld for income taxes
<> Nothing is withheld
<> 10% is withheld for income taxes
20% is withheld for income taxes
~ A plan sponsor must withhold 20% of the distribution in federal taxes on a rollover. once the rollover takes ...
What does a 401(k) plan generally provide its participants?
<> A defined retirement benefit
<> Salary-deferral distributions
<> Tax-free distributions
<> Salary-deferral contributions
Salary-deferral contributions
~ A 401(k) plan normally provides participants with a sal...
A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a:
<> 403(b) plan
<> profit-sharing
<> rollover plan
<> salary reduction plan
profit-sharing plan
~ Profit-sharing plans set aside a portion of a company’s net incom...
Related Flashcard Decks
| Term | Definition |
|---|---|
Which plan is intended to be used by a sole proprietor and the employees of that business? <> Keogh Plan <> SIMPLE Plan <> SEP Plan <> Individual Retirement Account (IRA) | Keogh Plan ~ A Keogh Plan may be used by a sole proprietor only if the employees of the business are included |
In a qualified retirement plan, the yearly contributions to an employee’s account: | are restricted to maximum levels set by the IRS ~ Annual limits to an employee’s qualified retirement plan are based on maximum limits set by the IRS. |
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2? | Ordinary income tax and a 10% tax penalty |
An individual participant personally received eligible rollover funds from a profit-sharing plan. What are the income tax withholding requirements for this transaction? <> 20% is withheld for income taxes <> 30% is withheld for income taxes <> Nothing is withheld <> 10% is withheld for income taxes | 20% is withheld for income taxes |
What does a 401(k) plan generally provide its participants? <> A defined retirement benefit <> Salary-deferral distributions <> Tax-free distributions <> Salary-deferral contributions | Salary-deferral contributions ~ A 401(k) plan normally provides participants with a salary-deferral option for contributions to the plan |
A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a: <> 403(b) plan <> profit-sharing <> rollover plan <> salary reduction plan | profit-sharing plan ~ Profit-sharing plans set aside a portion of a company’s net income for distribution to qualified employees |
What type of employee welfare plans are not subject to ERISA regulations? <> Qualified plans <> Corporate <> Church plans <> Major medical plans | Church plans |
A qualified profit-sharing plan is designed to: | allow employees to participate in the profits of the company ~ One of the purposes of a qualified profit-sharing plan is to distribute a portion of company earnings to employees |
What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan? <> 250 <> 100 <> 50 <> 25 | 100 ~ An employer can have a maximum of 100 employees earning at least $5,000 to be eligible for a SIMPLE retirement plan |