Fundamentals Of Taxation 2018 11th Edition By Ana Cruz – Test Bank

Chapter 11 Retirement and Other Tax-Deferred Plans and Annuities

1) Retirement accounts include traditional IRAs, Roth IRAs, Keoghs, and Coverdell Education Savings Accounts.

Answer: FALSE
Difficulty: 1 Easy
Topic: Tax-Deferred Plans and Annuities: The Basics
Learning Objective: 11-01 Discuss the basic tax and operational structure of tax-deferred plans and annuities.
EA: Yes
Accessibility: Keyboard Navigation

2) An annuity is a series of payments made pursuant to a contract.

Answer: TRUE
Difficulty: 1 Easy
Topic: Tax-Deferred Plans and Annuities: The Basics
Learning Objective: 11-01 Discuss the basic tax and operational structure of tax-deferred plans and annuities.
EA: No
Accessibility: Keyboard Navigation

3) All tax-deferred pension plans have an accumulation period and a distribution period.

Answer: TRUE
Difficulty: 1 Easy
Topic: Tax-Deferred Plans and Annuities: The Basics
Learning Objective: 11-01 Discuss the basic tax and operational structure of tax-deferred plans and annuities.
EA: No
Accessibility: Keyboard Navigation

4) If a retirement plan is funded with dollars that have not been taxed, the distributions will not be taxed.

Answer: FALSE
Difficulty: 1 Easy
Topic: Tax-Deferred Plans and Annuities: The Basics
Learning Objective: 11-01 Discuss the basic tax and operational structure of tax-deferred plans and annuities.
EA: Yes
Accessibility: Keyboard Navigation

5) Contributions to a qualified pension plan can be deducted immediately by an employer.

Answer: TRUE
Difficulty: 1 Easy
Topic: Employer-Sponsored Retirement Plans
Learning Objective: 11-02 Explain details about and contributions to employer-sponsored retirement plans.
EA: No
Accessibility: Keyboard Navigation

6) Under a qualified profit-sharing plan, contributions must be made at least annually whether or not the employer has positive net income for the year.

Answer: FALSE
Difficulty: 1 Easy
Topic: Employer-Sponsored Retirement Plans
Learning Objective: 11-02 Explain details about and contributions to employer-sponsored retirement plans.
EA: No
Accessibility: Keyboard Navigation

7) Defined-benefit plans provide for a stream of definitely determinable benefits.

Answer: TRUE
Difficulty: 1 Easy
Topic: Employer-Sponsored Retirement Plans
Learning Objective: 11-02 Explain details about and contributions to employer-sponsored retirement plans.
EA: No
Accessibility: Keyboard Navigation

8) In order to obtain and retain qualified status, a pension or profit-sharing plan must not discriminate in favor of highly compensated employees.

Answer: TRUE
Difficulty: 1 Easy
Topic: Employer-Sponsored Retirement Plans
Learning Objective: 11-02 Explain details about and contributions to employer-sponsored retirement plans.
EA: No
Accessibility: Keyboard Navigation

9) Employers with 200 or fewer employees who do not have a qualified pension or profit-sharing plan can establish a SIMPLE retirement plan for their employees.

Answer: FALSE
Explanation: The threshold is 100 or fewer employees.
Difficulty: 1 Easy
Topic: Employer-Sponsored Retirement Plans
Learning Objective: 11-02 Explain details about and contributions to employer-sponsored retirement plans.
EA: No
Accessibility: Keyboard Navigation

10) SIMPLE plans are not subject to the nondiscrimination rules for other qualified plans.

Answer: TRUE
Difficulty: 1 Easy
Topic: Employer-Sponsored Retirement Plans
Learning Objective: 11-02 Explain details about and contributions to employer-sponsored retirement plans.
EA: No
Accessibility: Keyboard Navigation