Question 1 (1 point)

Juan T. B. and I. B. Cool were married 8 years ago. Their divorce was finalized this week. At age 65, I. B. is eligible for Social Security benefits under Juans work record.

Question 1 options:

	True
	False

Question 2 (1 point)

Jane Jones, a widow with two adult sons (Sam, Dave) is in a combined 48% federal and state estate tax bracket. Jane is charitably minded, so she transfers $1,000,000 of appreciated IBM stock to a charitable remainder annuity trust (CRAT), retaining a 6% annuity interest for herself. After Jane's death, the CRAT assets will pass to the American Heart Association. If Jane does not set up a wealth replacement trust, Sam and Dave will inherit:

Question 2 options:

	$1,000,000
	$940,000
	$520,000
	$480,000

Question 3 (1 point)

The IRS caught the plan trustee for Hopper Manufacturing violating the prohibited transaction rules. Hopper Manufacturing:

Question 3 options:

	must pay a initial penalty equal to 5% of the amount involved
	must pay a 100% penalty if the transaction is not corrected within time limits set by the IRS
	may face penalties for breech of fiduciary responsibility
	all of the above
	only a and b

Question 4 (1 point)

Jay Casteel, age 29, ran a small water ski and jet ski rental shop in Gulf Shores. Unfortunately, near the end of the last season, a sudden storm with hurricane force winds damaged or destroyed over half of his inventory. Revenues since the storm have been meager due to massive clean up efforts and slower tourist trade. Jay is beginning to be pressured by some of his creditors. Jay has heard that the small Keogh fund that he started can be seized by his creditors if he cannot work out a repayment plan. You tell him that this is:

Question 4 options:

	True
	False

Question 5 (1 point)

Quincy Winstar, age 50, has $200,000 in a traditional IRA and is considering conversion to a Roth IRA in 2009. Quincy earns $125,000 per year and his wife, Shawna earns $50,000. They file separate tax returns. As his financial advisor, you tell Quincy

Question 5 options:

	he is not eligible for making an IRA conversion
	he would have to pay income tax on any amounts rolled over from the traditional IRA to the Roth IRA
	he would have to pay a 10% penalty in addition to tax on any monies rolled over since he is under age 59
	he can make a tax free rollover from a traditional IRA to a Roth IRA
	he can minimize the tax consequences of the rollover by using a series of annual partial conversions rather than one large conversion