Insurance MCQ

In a qualified retirement plan, the yearly contributions to an employee's account Answer: are restricted to maximum levels set by the IRS

Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? Answer: If Tom's employment is terminated, 20% of the funds would be forfeited

A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a Answer: profit-sharing plan

Premature IRA distributions are assessed a penalty tax of Answer: 10%

How are Roth IRA distributions normally taxed? Answer: Distributions are received tax-free

How long does an individual have to "rollover" funds from an IRA or qualified plan? Answer: 60 days

Which of these retirement plans can be started by an employee, even if another plan is in existence? Answer: Individual Retirement Account (IRA)

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age? Answer: 59 1/2

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the Answer: marital deduction

Post-tax dollar contributions are found in Answer: Roth IRA investments

A self-employed individual makes $95,000 per year. To which type of retirement plan can the maximum contribution be made? A. Roth IRA B. Traditional IRA C. SEP IRA D. SIMPLE IRA Answer: C.

An individual, age 40, earns $60,000 per year. He has no family and has $200,000 of life insurance. He contributes 6% of his salary to his company sponsored 401(k) annually. He informs his registered representative that he is getting a $5,000 raise. What should you recommend that the customer do with the raise? A. Purchase a non-qualified variable annuity by making $5,000 a year payments B. Increase the 401(k) contributions by $5,000 per year C. Use the $5,000 annual increase to purchase a fixed annuity contract under a contractual plan D. Roll the 401(k) into a variable annuity contract and then re-roll the variable annuity into an IRA Answer: B.

A 45-year old man earns $150,000 per year and is covered by his employer's 401(k) Plan. He quits his job and moves to a new company that has no retirement plan, but will also pay him $150,000 per year. He should be advised to: A. continue to make maximum annual contributions to his 401(k) Plan B. roll his 401(k) Plan into a Roth IRA and continue to make annual contributions to the Roth IRA C. roll his 401(k) Plan into a Traditional IRA and continue to make annual contributions to the Traditional IRA D. request a distribution of the 401(k) and use the proceeds to buy a variable annuity Answer: C.

Which of the following statements are TRUE regarding contributions to 403(b) tax deferred annuities and the distributions from these plans after age 59 1/2? I Contributions are made with before tax dollars II Contributions are made with after tax dollars III Distributions are 100% taxable IV Distributions are tax free A. I and III B. I and IV C. II and III D. II and IV Answer: A.

Which retirement plan is corporate sponsored and permits employees to make the greatest pre-tax contribution? A. Roth IRA B. SIMPLE IRA C. 401(k) D. 403(b) Answer: C.

Which of the following statements about 403(b) Plans are TRUE? I Contributions are tax deductible to the employee II Contributions are not tax deductible to the employee III These plans are available to employees of any organization IV These plans are available to non-profit organization employees only A. I and III B. I and IV C. II and III D. II and IV Answer: B.

Which of the following investments are permitted for 403(b) plans? I Corporate stocks II Certificates of deposit III Fixed annuities IV Variable annuities A. I and IV only B. II and III only C. III and IV only D. I, II, III, IV Answer: C.

Tax deferred annuities for employees of non-profit organizations are known as: A. SEP IRA Plans B. Defined Benefit Plans C. 401(k) Plans D. 403(b) Plans Answer: D.

Which statement is FALSE about a SIMPLE IRA? A. The maximum annual contribution is the same as for a Traditional IRA B. The contribution is made by the employee, who gets a salary reduction for the amount contributed C. The plan is only available to small employers D. The employer must make a matching contribution Answer: A.

Which statement is FALSE about a SIMPLE IRA? A. The maximum annual contribution is higher than for a Traditional IRA B. The contribution is made by the employee, who gets a salary reduction for the amount contributed C. The plan is available to any size employer D. The employer must make a matching contribution Answer: C.