Exercise
Answer the following questions
- 1. How is a Roth 401(k) similar to a Roth IRA and/or a 401(k) plan?
- A. As with a Roth IRA, as long as participants in a Roth 401(k) are over 59 1/2 years old and have had the account for five years or more, they can make all withdrawals tax-free.
- B. Roth 401(k)s resemble traditional 401(k)s in that the employer can make matching contributions into the after-tax Roth 401(k).
- C. A Roth 401(k) is similar to a Roth IRA in that they both have no restrictions on income level.
- D. As with the Roth IRA, Roth 401(k) participants have to start taking distributions from the Roth 401(k) beginning the year the owner turns 70 1/2.
- 2. True or false. A Roth 401(k) may be rolled over into a traditional 401(k).
- 3. If Winston wants to roll over or transfer his qualified retirement plan when he leaves his job next month, what effects does he need to consider?
- A. Whether he can set up another suitable plan before he leaves his job or within 60 days
- B. Whether he did a rollover of the same account in the last year
- C. Whether he can replace the 20% the IRS will take if he chooses a rollover
- D. All of the above
- 4. True or false. Rollovers of all qualified retirement plans require that 20% of the balance be held by the IRS for the rest of that tax year.
- 5. True or false. Roth