Series 6: Chapter 3 Practice Questions

Chapter 3 Practice Questions

1. 1. Each of the following is a type of qualified retirement plan except:
2. A. Deferred compensation plan
3. B. 401(k)
4. C. Profit-sharing plan
5. D. 403(b)
6. 2. ERISA regulations apply to all of the following except:
7. A. Beneficiary designation and participation requirements
8. B. Section 457 plans
9. C. Vesting and disclosure requirements
10. D. Section 401(k) plans
11. 3. All money coming out of a tax-qualified retirement plan is:
12. A. Taxable as ordinary income
13. B. Received tax-free
14. C. Taxable as a short-term capital gain
15. D. Taxable as a long-term capital gain
16. 4. Which of the following would be likely to use a 403(b) plan?
17. A. S Corps
18. B. Nonprofit organizations
19. C. Teachers
20. D. Sole proprietors
21. 5. Which of the following refers to an investor’s ability to avoid IRS penalties by taking substantially equal periodic payments?
22. A. Rule 59(a)
23. B. Section 1035
24. C. Section 457
25. D. Rule 72(t)
26. 6. All of the following are exceptions that would allow an investor to avoid the 10% tax penalty on IRA early withdrawals except:
27. A. Withdrawals for certain educational expenses
28. B. Death
29. C. Living expenses if unemployed
30. D. First-time home purchase up to $10,000
31. 7. How much money does Mrs. Meyer owe to the IRS if she takes a one-time distribution payment of $20,000 from her 401(k) to pay for a vacation to Antarctica? Mrs. Meyer is 55 years old and is in the 15% tax bracket.
32. A. $2,000
33. B. $3,000
34. C. $5,000
35. D. $7,000
36. 8. How is a Roth 401(k) similar to a Roth IRA and/or a 401(k) plan?
37. 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.
38. B. Roth 401(k) plans resemble tradi