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Multiple Choice Quiz
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1
A distribution from a retirement plan is conceptually similar to a withdrawal from a savings account.
A)True
B)False
2
Annual contributions to Keogh plan cannot exceed the greater of $45,000 or 100% of compensation.
A)True
B)False
3
For taxpayers under age 50, contributions can be made to a Roth IRA in an amount equal to the lower of $4,000 or 100% of compensation, plus the amount of contributions for the year to other IRA's.
A)True
B)False
4
Distributions from a Coverdell Education Savings Account are tax free to the beneficiary if they are used for his or her qualified education expenses.
A)True
B)False
5
Generally, tax-deferred retirement plans are not required to make distributions to beneficiaries.
A)True
B)False
6
Which of the following statements is incorrect?
A)Individual-based retirement plans include a SIMPLE plan.
B)A payment to a beneficiary from a pension plan is called a withdrawal.
C)Tax-deferred plans can be created for purposes other than retirement.
D)Normally, pension plans are funded with contributions that have not been taxed, so the withdrawals are taxed.
7
All of the following are employer-sponsored plans except
A)Coverdell Education Savings Account.
B)Qualified profit sharing plan.
C)Keogh plan.
D)403(b).
8
Puri is a self-employed Spanish teacher. Her earnings from self- employment before the Keogh deduction but after deducting half of the self-employment tax are $110,000. What is her deductible Keogh contribution for 2007?
A)$22,000
B)$27,500
C)$45,000
D)$88,000
9
In 2007, a 48-year-old participant in a 401(k) plan may contribute a maximum of:
A)$5,500.
B)$10,500.
C)$15,500.
D)$20,500.
10
Maurice is age 44, single, and reported AGI of $58,000 in tax year 2007. He is an active participant in his employer's pension plan. What is the maximum deductible IRA contribution he can make in 2007?
A)$0.
B)$1,600.
C)$2,400.
D)$4,000.
11
Harriett is age 52, married, and reported AGI of $86,000 in tax year 2007. She is an active participant in her employer's pension plan. What is the maximum deductible IRA contribution she can make for her own account in 2007?
A)$2,800
B)$3,500.
C)$4,000.
D)$5,000.
12
Augustus is single and age 56. He had AGI of $33,000 in tax year 2007 and is an active participant in his employer's pension plan. What is the maximum deductible IRA contribution he can make in 2007?
A)$1,200.
B)$2,800.
C)$4,000.
D)$5,000.
13
Which of the following statements regarding a Coverdell Education Savings Account (CESA) is correct?
A)Distributions must be exclusively used to pay the higher education expenses of the beneficiary.
B)A person can contribute to a CESA only if the beneficiary is related by blood or marriage.
C)A taxpayer who files a joint tax return can contribute to a CESA only if their AGI is less than $150,000.
D)Contributions to a CESA are tax deductible and the distributions are tax-free (if used for their intended purpose).
14
Hyman is age 34, single, and has AGI of $130,000. He would like to contribute to a Coverdell Education Savings Account (CESA) for his niece, Danielle. Danielle's father has already contributed $500 to a CESA in 2007. What is the maximum CESA contribution Hyman can make for Danielle in 2007?
A)$0
B)$500
C)$1,500
D)$2,000
15
Hamden is entitled to receive monthly payments of $6,000 over his life from his employer's qualified pension plan. The payments begin January 1, 2007. He contributed $286,000 to the plan prior to his retirement at age 62. Using the simplified method, how much of the payments will be excluded from Hamden's taxable income for 2007?
A)$0.
B)$13,200.
C)$58,800.
D)$72,000.
16
Max retired in 2007 at age 62. During the year he received distributions of $12,000 from his IRA. He made non-deductible contributions of $30,000 to the IRA in prior years and has never received a non-taxable distribution. As of December 31, 2007, the value of his IRA was $250,000. Calculate the nontaxable portion of Max's distribution.
A)$0.
B)$1,374.
C)$10,626.
D)$12,000.
17
Pierre retired in 2007 at age 62. During the year he received distributions of $27,000 from his IRA. He made non-deductible contributions of $60,000 to the IRA in prior years and has never received a non-taxable distribution. As of December 31, 2007, the value of his IRA was $450,000. Calculate the taxable portion of Pierre's distribution.
A)$0.
B)$3,396.
C)$23,604.
D)$27,000.
18
Damian is age 79. He purchased a single life annuity contact that will pay him $4,000 per month for life. The expected return on the contact is
A)$43,200
B)$78,000
C)$518,400
D)$936,000
19
Felix is age 74 and his wife is age 73. He purchased a single life annuity contract that will pay him $80,000 per year for life. The expected return on the contract is
A)$1,976,000
B)$1,904,000
C)$1,184,000
D)$1,128,000
20
Paolo is age 77. He paid $240,000 for a single life annuity contact that will pay him $43,200 per year for life. The tax-free amount of the first $43,200 payment is
A)$13,448
B)$16,986
C)$26,214
D)$29,752





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