Review Questions Module 3
SEP-IRAs
Unless otherwise noted, assume the following questions relate to participants under age 50.
a. an employer with 50 or fewer employees
b. an employer with more than 100 employees
c. a self-employed individual
d. an employee with earned income
a. a profit sharing plan
b. a 401(k) plan
c. a Model SEP plan
d. a Non-Model SEP plan
I. are at least 21 years old
II. earned at least $300 (adjusted for inflation) during the year
III. earned at least $5,000 during the year
IV. have worked for the employer for three of the past five years
a. I only
b. II only
c. I and III only
d. I, II, and IV only
a. 401(k) plan
b. Keogh plan
c. SEP plan
d. SIMPLE plan
a. $40,000 (adjusted for inflation)
b. 25% of compensation
c. the greater of a or b
d. the lesser of a or b
a. the employee
b. the employer
c. both the employee and employer
d. neither the employee or employer
a. included in gross income
b. tax deductible
c. excluded from gross income
d. tax free
a. governed by a document executed by all eligible employees
b. a verbal agreement between the employer and employees
c. a written document executed by the employer
d. always submitted to the IRS for approval
a. integrates SEP contributions with Social Security
b. currently maintains a profit sharing plan
c. terminates any existing defined benefit plan
d. establishes IRAs for all eligible employees
I. an officer of the employer earning $160,000
II. owners holding 5% or more ownership in the employer
III. non-owner employees earning $150,000 or more per year
IV. any of the 10 largest owners in the employer
a. I and II only
b. I or IV only
c. II and III only
d. I, II and IV only
a. vest benefits more quickly
b. reduce the contributions made for key personnel
c. make a mandatory contribution of 3% of each non-key employee's compensation
d. terminate the plan
a. 6%
b. 10%
c. 20%
d. 50%
a. 6% of an employee's compensation
b. $3,000 per year
c. 6% of an employee's first $15,000 of compensation and 3% of compensation over $15,000
d. 6% of an employee's compensation in excess of $25,000
a. the plan is disqualified
b. the contribution must be paid directly to the employee
c. the employer may establish an IRA in the name of the employee
d. no SEP contributions may be made to any other employee IRAs for that year
a. gross revenues
b. net income before deducting the SEP contribution
c. net income after deducting the SEP contribution
d. gross revenues after deducting the SEP contribution
a. ordinary income taxation
b. a 10% penalty for premature distribution
c. a 6% penalty on excess contributions
d. all of the above
a. age 21
b. age 59½
c. retirement
d. 70½
a. retirement
b. plan termination
c. age 59½
d. age 70½
a. end of the calendar year
b. the end of the employer's tax year
c. the employer's tax filing date
d. the employer's tax filing date plus extensions
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