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1.Most retirement plans mandate that individuals be penalized for withdrawing funds prior to age 59 . (True/False). 2.The Required Minimum Distribution (RMD) for the year

1.Most retirement plans mandate that individuals be penalized for withdrawing funds prior to age 59 . (True/False).

2.The Required Minimum Distribution (RMD) for the year is determined by dividing the account balance at year end by the account owner's age.(True/False).

3.If in addition to a traditional IRA, an individual has a Roth IRA, the total amount of contributions to both accounts cannot exceed $5,500 ($6,500 if the individual is age 50 or older) of current compensation in a given year.(True/False).

4.A rollover IRA may be established to allow an individual to move funds maintained in a qualified retirement plan when he/she separates from service or retires. There is no limit on the amount that can be rolled over. (True/False).

5.IRA owners are required to obtain spousal consent to a distribution. (True/False).

6.There are 4 basic types of defined contribution plans, including all of the following EXCEPT:

a.A profit-sharing plan

b.A 401(k) plan

c.A money-purchase pension plan

d.A flat benefit pension plan

7.Qualified distributions from a Roth IRA are entirely tax-free providing the following are true, EXCEPT:

athe distribution must not be earlier than five years from the first year the individual established a Roth IRA

bthe individual must have reached age 55

cthe distribution may be made to a beneficiary after the owner's death

dthe distribution may be made for a first time home up to $10,000

7.The formula for determining the nontaxable portion of each year's payment of an annuity stream is commonly referred to as the

a.exclusion ratio

b.safe harbor percentage

c.inclusion ratio

d.expected return liability

9.Sue withdraws $4,000 from her IRA when she is 40 years old, of which $3,500 is taxable. If none of the exceptions to the premature distribution penalty applies, what will her premature distribution penalty be?

a.$350

b.$400

c.$875

d.$1,000

10.Marjorie receives a rollover distribution of $655,000 from her 401(k) plan at former employer. She would like to retire at age 55, at which time she would need to withdraw funds from her retirement plans. Presently, she has not found any employment and so cannot rollover the qualified plan balance directly into a new qualified employer plan. She decides to establish a "rollover" IRA to accept the full amount of her distribution from RI, Inc. When she does eventually find a new job and the employer does offer a qualified plan for employees,

a.Marjorie will have to wait 180 days after accepting the new job in order to qualify for a rollover into the new plan

b.there will be a 10% penalty assessed upon the rollover amount if she did not find employment with 180 days

c.Marjorie can rollover the entire amount into the plan and protect her ability to receive payments at age 55 without penalty

d.a 365-day counting period commences from the date she left her former employer that requires Marjorie to place a rollover distribution into a qualified plan

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