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1
Tax-deferred plans are only available for purposes of saving for retirement.
A)True
B)False
2
Defined-contribution plans establish the amount of retirement benefits an employee will receive in retirement.
A)True
B)False
3
SIMPLE and SEP plans are subject to the same nondiscrimination rules that apply to other retirement plans.
A)True
B)False
4
Individuals age 50 or older can make larger annual contributions to an IRA.
A)True
B)False
5
Individuals who are active participants in an employer-sponsored retirement plan may make a deductible contribution to a traditional IRA in certain circumstances.
A)True
B)False
6
Individuals who make contributions to a Coverdell Education Savings Account must have AGI of $175,000 or less.
A)True
B)False
7
A stream of payments can be called an annuity.
A)True
B)False
8
The proportion of an annuity payment from a qualified pension plan that is determined to come from employee contributions is taxed at ordinary income rates.
A)True
B)False
9
Pension plan distributions are reported to taxpayers on a Form 1099-D.
A)True
B)False
10
The expected return on an annuity contract that will last for a specified amount of time is determined with reference to the life expectancy tables published by the IRS.
A)True
B)False
11
Which of the following is not an employer-sponsored retirement plan?
A)Roth IRA
B)SIMPLE
C)401(k)
D)Qualified pension plan
12
Which of the following statements is incorrect?
A)Tax-deferred plans have an accumulation period and a distribution period.
B)Normally, if a retirement plan is funded with dollars that have already been taxed, the distributions will be taxed.
C)For a qualified retirement plan during the accumulation period, no taxes are due on the earnings from the plan investments.
D)Contributions to retirement plans are often limited in amount.
13
What are the tax consequence(s) related to a qualified pension plan?
A)Employer contributions are deductible when made.
B)Earnings on the contributions are taxable.
C)Employees are not taxed until distributions are received from the trust.
D)Only a. and c.
14
In 2007, the maximum annual contribution to a SIMPLE pension plan for an employee under the age of 50 is:
A)$4,000
B)$10,500
C)$15,500
D)$45,000
15
In 2007, the maximum annual contribution to a Simplified Employee Pension (SEP) plan for an employee under the age of 50 is:
A)$4,000
B)$10,500
C)$15,500
D)$45,000
16
Employees age 50 or over can contribute an additional ________ per year to a 401(k) plan.
A)$1,000
B)$2,500
C)$5,000
D)$15,500
17
Paulette is age 32, single, and reported AGI of $58,000 in tax year 2007. She is an active participant in her employer's pension plan. What is the amount of the deductible IRA contribution that is disallowed in 2007?
A)$0.
B)$1,600.
C)$2,400.
D)$4,000.
18
Which of the following statements regarding Individual Retirement Accounts (IRA) is incorrect?
A)Contributions to a conventional IRA may be tax-deductible while contributions to a Roth IRA are never tax-deductible.
B)Excess contributions to an IRA are subject to an excise tax.
C)Because IRA contributions are based on compensation, a non-working spouse cannot make a contribution to an IRA.
D)Once a taxpayer reaches age 70 ½ contributions can still be made to a Roth IRA but not to a conventional IRA.
19
Gwen is age 51, 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 amount of the deductible IRA contribution that is disallowed in 2007?
A)$1,200
B)$1,500.
C)$3,500.
D)$4,000.
20
DJ is age 27, single, and reported AGI of $61,000 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)$400.
C)$3,600.
D)$4,000.
21
Patrick is age 30, single, and has AGI of $101,000. He would like to contribute to a Coverdell Education Savings Account (CESA) for his niece, Eileen. Eileen's father has already contributed $500 to a CESA in 2007. What is the maximum CESA contribution Patrick can make for Eileen in 2007?
A)$0
B)$1,200
C)$1,500
D)$2,000
22
Chandelle and Treymane are married and have combined AGI of $215,000. They would like to contribute to a Coverdell Education Savings Account for their grandson. What is the maximum contribution they can make in 2007?
A)$2,000
B)$1,667
C)$333
D)$0
23
Which of the following statements regarding a Coverdell Education Savings Account (CESA) is correct?
A)An individual can be the beneficiary of multiple CESA's.
B)Annual contributions are limited to $2,000 per beneficiary, per contributor.
C)A contributor cannot make a contribution for themselves.
D)For single taxpayers, permitted contributions begin to be phased out when AGI reaches $90,000.
24
Which of the following statements is incorrect?
A)Roth IRA distributions are never taxable.
B)Taxpayers can roll over plan assets from one plan to another tax free if certain rules are followed.
C)If tax-free distributions from a Coverdell Education Savings Account are used for qualified education expenses, they cannot be used to determine Hope education credits. For plan distributions, the date on which minimum payments must begin is April 1 of the calendar year following the year in which the taxpayer reaches age 70 ½.
25
Distributions from a retirement plan are not subject to a 10% additional tax in each of the following instances except
A)The distribution is made to pay an IRS tax levy.
B)The distribution is paid to an employee to be used to pay health insurance premiums.
C)The distribution is used to pay for medical expenses above the 7.5% AGI threshold.
D)The distribution is made to an employee or retiree on or after age 59 ½.
26
Mark must start making distributions from his pension plan beginning April 1, 2007. At the end of 2006 when Mark was 71 years old, the plan had a balance of $110,000. He will use a single life expectancy. What amount must Mark take as a distribution from the pension plan beginning April 1, 2007?
A)$4,151.
B)$6,471.
C)$6,748.
D)$7,097.
27
At the end of 2005, Erin was 71 years old and her pension plan had a balance of $200,000. She properly withdrew $12,270 from her pension plan in 2006, the first year she took a withdrawal. In 2006, her pension plan assets earned $25,000. She uses the term certain method to determine minimum distributions from her pension plan. What amount must Erin take as a distribution from her pension plan in 2007?
A)$13,072
B)$13,725
C)$13,904
D)Some other amount.
28
Which of the following statements is incorrect?
A)An annuity is a series of payments under a contract.
B)Annuity payments are fixed in amount.
C)Annuity payments may be for a specified period of time or for the life of the contract holder.
D)The proportional amount of an annuity payment that is attributable to the cost of the contract is tax free.
29
Which of the following statements is incorrect?
A)The exclusion ratio represents the proportion of each annuity payment that will be tax free.
B)If annuity payments are to be received for a fixed period, the taxpayer does not need to refer to the life expectancy tables provided by the IRS.
C)To determine the taxable amount of each annuity payment, the taxpayer must know the cost of the contract.
D)Once the cost of the annuity has been recovered, any remaining payments will be tax free.
30
To calculate the taxable portion of an annuity payment, a taxpayer must determine all of the following except
A)The cost of the annuity contract.
B)The year in which annuity payments were first received.
C)The expected return from the contract.
D)The amount and frequency of occurrence of the stream of annuity payments.





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