QUESTION 1

1. In considering whether to convert a traditional IRA to the Roth IRA form, which of the following is a valid consideration?

If the taxpayer files as married filing separately and thereby splits income, it generally makes sense to convert.

It is generally advantageous if the converted assets will remain in the Roth IRA for a relatively short period of time before withdrawal.

If the source of payment for taxes due upon conversion comes from an outside source, it generally is advantageous to convert.

If the taxpayer anticipates being in a lower tax bracket at date of distribution from the Roth IRA, it generally makes sense to convert.

1 points

QUESTION 2

A single taxpayer, age 54, retired 2 years ago and is receiving a pension of $600 per month from her previous employers qualified pension plan. She has recently taken an employment position in a small CPA firm that has no pension plan. She will receive $80,000 annually in compensation from the CPA firm as well as $7,200 from her pension plan each year. How much can she contribute, if any, to a deductible traditional IRA in the year 2016?

$0

$4,000

$5,500

$6,500

1 points

QUESTION 3

1. Which of following statements regarding a nonqualified distribution from a Roth IRA is NOT correct?

A distribution made before the 5-year period may avoid the 10% penalty if other conditions are met.

A distribution that consists of earnings will always be subject to income taxation.

A distribution that consists of conversion amounts may avoid the 10% penalty for the conversion portion.

A distribution that consists of earnings will always be subject to the 10% penalty for that portion of the distribution.

1 points

QUESTION 4

1. Terry and Nancy are both age 39 and each plan to contribute $5,500 to their traditional IRAs for the 2016 tax year. They are both employed and file a joint income tax return. However, only Terry is eligible for and participates in his employers qualified retirement plan. Terry and Nancys modified AGI and earned income for the year 2016 is $99,000. What amount, if any, can Nancy deduct for her IRA contribution?

$200

$2,500

$4,400

$5,500

1 points

QUESTION 5

1. Which of the following investments may be held in an IRA account?

U.S. gold coin

German silver coin

Canadian gold coin

South African Krugerrand

1 points

QUESTION 6

In 2016, Nina and Bob reported the following items of income:

Nina	Bob	Total
Salary	$40,000	$ 0	$40,000
Interest income	$ 1,000	$ 200	$ 1,200
Alimony received (prior to marriage)	$ 0	$10,000	$10,000
Total	$41,000	$10,000	$51,200

Neither Nina nor Bob is covered by a qualified retirement plan. They were married in December 2016. Assuming they file married filing jointly and are both age 45, what is the maximum combined tax-deductible amount, if any, that they can contribute to their traditional IRAs?

$0

$5,500

$6,500

$11,000

1 points

QUESTION 7

Which of the following statements regarding prohibited transactions by a fiduciary or an individual associated with traditional IRA accounts are CORRECT?

1. Generally, if an individual or the individuals beneficiary engages in a prohibited transaction with the individuals IRA account at any time during the year, it will not be treated as an IRA as of the 1st day of the year.

2. If an individual borrows money against an IRA annuity contract, the individual must include in gross income the fair market value of the annuity contract as of the 1st day of the tax year.

3. Selling property to an IRA by a fiduciary or an individual owner of the IRA is not prohibited.

4. A 50% penalty will be assessed against an IRA owner who borrows money against her IRA.

1 and 2

1, 3 and 4

1, 2 and 3

2 and 3

1 points

QUESTION 8

1. Which of the following statements regarding the deductibility of contributions to a traditional IRA is CORRECT?

There are no restrictions on the deductibility of contributions provided the individual is an active participant in an employer-sponsored retirement plan.

The limit on nondeductible traditional IRA contributions is the phaseout amount (excess of

the maximum annual contribution amount over the amount actually deductible).

Deductible contributions to an employed individuals IRA and an unemployed spouses spousal IRA are limited to the lesser of 100% of earned income or $3,000.

Alimony and rental income are considered earned income for the purposes of making a deductible contribution to a traditional IRA.

1 points

QUESTION 9

1. Which of the following statements is NOT correct regarding the conversion of a traditional IRA to a Roth IRA in 2016?

The IRA owners modified adjusted gross income (MAGI) cannot exceed $100,000 in the year of the conversion.
An amount in a traditional IRA may be transferred in a trustee-to-trustee transfer from the trustee of the traditional IRA to the trustee of the Roth IRA.
	An amount distributed from a traditional IRA can be rolled over to a Roth IRA within 60 days of the distribution.
An amount in a traditional IRA may be transferred to a Roth IRA maintained by the same trustee.

QUESTION 10

What is the taxable character of distributions that are made from a Roth IRA?

Tax-free income if the distribution meets the holding period and qualified distribution requirements

Tax-deferred income when converted to a traditional IRA

Capital gain income if the distribution meets the required holding period

Ordinary income if the taxpayer fails to make required minimum distributions