Chapter 16 Practice Questions
1. Which of the following is permitted inside of your IRA account?
A. Purchasing life insurance
B. Purchasing art
C. Purchasing a variable annuity
D. Writing 10 call options on XYZ Corporation with no long position in the stock
2. ERISA regulations apply to all of the following except:
A. Beneficiary designation and participation requirements
B. Section 457 plans
C. Vesting requirements
D. Disclosure requirements
3. The income tax burden is likely to be the lightest on retirement income coming out of a:
A. SEP IRA
B. Roth IRA
C. Defined benefit plan
D. Keogh plan
4. A 57-year-old beginning substantially equal periodic payment plan payments under Rule 72(t) would have to continue receiving those payments:
A. For five years
B. For ten years
C. Until age 59 1/2
D. At least until age 59 1/2, with mandatory recalculation prior to age 62
5. The owner of a traditional IRA is required to begin taking distributions by what date?
A. December 31 of the year she turns 72
B. December 31 of the year she turns 59 1/2
C. April 1 of the year she turns 72
D. April 1 of the year after she turns 72
6. Which of the following refers to an investor’s ability to avoid IRS penalties by taking substantially equal periodic payments?
A. Rule 59(a)
B. Section 1035
C. Rule 72(t)
D. Section 457
7. All of the following are exceptions that would allow an investor to avoid the 10% tax penalty on IRA early withdrawals except:
A. Withdrawals for certain educational expenses
B. Death
C. Living expenses if unemployed
D. First-time home purchase up to $10,000
8. Keogh plans are retirement plans used for:
A. S-corps
B. Non-profit organizations
C. Teachers
D. Sole proprietors
9. All money coming out of a tax-qualified retirement plan is:
A. Taxable as ordinary income
B. Received tax-free
C. Taxable as a s