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text.
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1.
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For tax year 2019, an IRA can be established anytime between:
a. | April 15, 2019 and April 15, 2020 | b. | January 1, 2019 and
December 31, 2019 | c. | January 1, 2019 and April 15,
2020 | d. | April 15, 2019 and December 31, 2019 |
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2.
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Mary Jackson, age 52, works part-time at a local department store during the
Christmas season. She earned $2,500. She has no other earnings. How much may she
may contribute to an IRA?
a. | 0 | b. | $2,000 | c. | $2,500 | d. | $3,000 |
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3.
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Dr. Knight, a retired dentist aged 73, earned $6,500 speaking at a
seminar. How much may he contribute to a traditional IRA?
a. | 0 | b. | $4,000 | c. | $5,000 | d. | $6,500 |
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4.
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Dr. Knight, a retired dentist aged 73, earned $5,000 speaking at a seminar
in 2019. How much may he contribute to a Roth IRA?
a. | 0 | b. | $2,500 | c. | $5,000 | d. | $6,500 |
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5.
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John and Mary Smith report joint taxable income of $135,000. John, age 62,
earns $130,000. He is covered by his company's pension plan. Mary works
part-time as a secretary for her church. She earned $5,000. They may Contribute: I. $6000 to
John’s non-deductabe IRA II. $6000 to John’s deductable IRA III. $6000 to
Mary’s non-deductable IRA IV. $6000 to Mary’s deductable IRA
a. | I and III | b. | I and IV | c. | II and
III | d. | II and IV |
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6.
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John Morgan, 47-year old a single taxpayer, has worked for XYZ Corporation for
two years, earning $95,000 per year. XYZ offers a qualified pension plan. John's
pension benefits will be fully vested next year. For 2019, John may:
a. | contribute $6,000 to a non-deductible IRA | b. | contribute $6,000 to
a deductible IRA | c. | contribute $6,000 to an IRA, of which $1,250 is deductible | d. | not contribute to an
IRA |
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7.
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All of the following are acceptable investments in an Individual Retirement
Account EXCEPT:
a. | preferred stocks | b. | zero coupon bonds | c. | variable annuity
contracts | d. | term life insurance policy |
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8.
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Who may withdraw funds from an IRA?
a. | a 47-year old woman | b. | a 53-year old permanently disabled
man | c. | the beneficiary of an IRA upon the death of the account
holder | d. | all of the above |
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9.
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Withdrawals may be taken, penalty-free, from a traditional IRA prior to age
59½ under all of the following circumstances EXCEPT:
a. | the account holder is disabled | b. | the account holder is
deceased | c. | equal payments are scheduled for a lifetime | d. | due to financial
hardship |
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10.
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Contributions to a Roth IRA are:
a. | always tax deductible | b. | sometimes tax deductible | c. | never tax
deductible | d. | subject to the same rules as traditional IRAs |
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11.
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Which of the following are true?
a. | those over age 70½ may establish a Roth IRA | b. | those over age
70½ may contribute to a Roth IRA | c. | those over age 70½ may rollover IRA
assets | d. | all of the above |
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12.
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Which of the following may NOT contribute to any IRA this year?
a. | Mr. Able, a 69-year old single taxpayer earning $87,000 | b. | Ms. Bravo, a 79-year
old married taxpayer earning $10,000 | c. | Mr. Charlie, a 65-year old married taxpayer
earning $17,000 | d. | Ms. Delta, a 72-year old single taxpayer earning
$150,000 |
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13.
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Contributions made to a Roth IRA by taxpayers whose income exceeds the
permissible levels are subject to:
a. | confiscation by the IRS | b. | a 6% penalty tax | c. | a 10% penalty
tax | d. | a 50% penalty tax |
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14.
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Distributions from a Roth IRA are tax-free if they are taken from the
account:
a. | due to the account holder's disability | b. | due to the account
holder's death | c. | to pay for the first-time purchase of a primary
residence | d. | any of the above if the account has been open for at least 5 tax
years |
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15.
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Non-qualified Roth IRA distributions are taxable as ordinary income. These
distributions are treated:
a. | as contributions first, then earnings | b. | as earnings first, then
contributions | c. | the same as a distribution from a non-deductible traditional IRA | d. | the same as a
distributions from a deductible traditional IRA |
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16.
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A 76-year old man has a Roth IRA valued at $88,000 as of January 1, 2019.
According to IRS tables, his life expectancy is 22.0 years. If he withdrew $2,000 from the IRA
during 2019, he is subject to a penalty of:
a. | 0 | b. | $1,000 | c. | $1,500 | d. | $2,000 |
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17.
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The maximum amount that may be contributed to a SEP on behalf of an employee
is:
a. | $40,000 (adjusted for inflation) | b. | 25% of compensation | c. | the greater of a or
b | d. | the lesser of a or b |
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18.
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An employer may establish a Model SEP if the employer:
a. | integrates SEP contributions with Social Security | b. | currently maintains
a profit sharing plan | c. | terminates any existing defined benefit
qualified plan | d. | establishes IRAs for all eligible employees |
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19.
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In the case of self-employed individuals who establish a SEP, the contribution
limits are based on:
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 |
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20.
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Contributions to a SEP-IRA must be made no later than the:
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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21.
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When counting employees who are "eligible" for a SIMPLE plan, the
employer must count:
a. | only those employees who have one year of service and are age 21 or
older | b. | only those employees who may make contributions to the plan | c. | only those employees
not covered by a collective bargaining agreement | d. | all employees who worked for the employer
during the year |
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22.
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If an employer adopts the most strict participation rules for a SIMPLE plan, who
may contribute to the plan?
a. | all eligible employees may participate | b. | eligible employees who earned at least $5,000
from the employer this year | c. | eligible employees who earned at least $5,000
from the employer in the past two years | d. | eligible employees who earned at least $5,000
from the employer in any of the past 2 years |
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23.
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Employees may terminate participation, i.e. elective deferrals, in a
SIMPLE plan:
a. | only on the election date | b. | by giving notice within 10 days of the election
date | c. | by giving notice within 60 days of the election date | d. | at any
time |
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24.
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Employers may deposit their matching or non-elective contributions into the
SIMPLE IRA plan:
a. | as soon as is reasonably possible | b. | by the 30th day after the end of the month in
which the employee would have otherwise received the deferral in cash | c. | by the end of the
employer's tax year | d. | by the filing date of the employer's tax
return |
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25.
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All contributions to a SIMPLE IRA plan must vest no slower than:
a. | three-year cliff vesting | b. | five-year cliff vesting | c. | three-to-seven year
graded vesting | d. | immediately |
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26.
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For an investor in the 28% tax bracket, a contribution of $5,000 to a deductible
IRA results in an immediate tax savings of:
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27.
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The Internal Revenue Service will tax income in a traditional IRA when it
is: I. earned in the account II. transferred
from one custodian to another III. rolled over from one custodian to
another IV. withdrawn from the account
a. | I only | b. | IV only | c. | II and III
only | d. | I, II and III only |
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28.
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All of the following are considered "earned income" EXCEPT:
a. | wages | b. | salary | c. | dividends | d. | commissions |
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29.
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Mary Jackson, age 52, works part-time at a local department store during the
Christmas season. She earned $2,500. She has no other earnings. How much may she
may contribute to an IRA?
a. | 0 | b. | $2,000 | c. | $2,500 | d. | $3,000 |
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30.
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Bunker Hunt, age 53, established an Individual Retirement Account with fully
deductible contributions. He withdraws $10,000 from his IRA , buys an airline ticket to Monte
Carlo, plays roulette, winning $100,000, and returns home a week later.
He then redeposits $10,000 into an IRA. Which of the following is true?
a. | The withdrawal is fully taxable as capital gains. | b. | The withdrawal is
fully taxable as ordinary income and subject to a 10% penalty. | c. | Only the earnings
portion of the withdrawal is taxable as ordinary income. | d. | There is no tax
consequence to the withdrawal. |
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31.
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Which of the following is an example of an IRA rollover:
a. | movement of IRA assets directly from a bank custodian to a brokerage firm
custodian | b. | movement of pension plan assets from the plan's trustee to an IRA
custodian | c. | withdrawal of IRA assets from a bank custodian and subsequent deposit with a
brokerage firm custodian | d. | movement of assets from a Keogh plan's
trustee to an IRA custodian |
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32.
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Robert Cratchet, age 65, is retiring. He elects to receive $175,000 as a
lump sum distribution from his employer's pension plan. Which of the following is a reason
for rolling over the lump sum into an IRA?
a. | to eliminate taxes on the distribution | b. | to delay taxes on the
distribution | c. | to receive current income from the IRA | d. | federal law requires rollover of lump sum
distributions into an IRA |
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33.
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Which of the following investments is permitted in an IRA?
a. | stamp collection | b. | limited edition lithographs | c. | US Gold Eagle
coins | d. | Canadian Maple Leaf gold coins |
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34.
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All of the following mutual funds would be suitable for a conservative IRA
investor EXCEPT:
a. | mutual funds investing in corporate bonds | b. | mutual funds
investing in utility stocks | c. | mutual funds investing in US government
bonds | d. | mutual funds investing in municipal bonds |
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35.
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Investors concerned with the effects of inflation would most likely invest their
IRA assets in:
a. | corporate bond mutual fund | b. | zero coupon bonds | c. | mutual fund
investing in utility stocks | d. | mutual fund investing in growth
stocks |
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36.
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Due to financial hardship, Mr. Johnson, age 46, withdraws $5,000 from his
IRA. He is in the 28% tax bracket. On the withdrawal, he must pay:
a. | $500 penalty | b. | $1,400 in taxes | c. | $1,400 in taxes and
a $500 penalty | d. | $2,500 penalty |
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37.
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Which of the following may withdraw funds from an IRA?
I. a 47-year old woman II. a 53-year old
permanently disabled man III. a beneficiary upon the death of
an IRA account holder IV. a 74-year old man
a. | II and III only | b. | III and IV only | c. | I, II and IV
only | d. | I, II, III and IV |
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38.
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Which of the following may withdraw funds from a traditional IRA without
penalty?
I. a 47-year old woman
II. a 53-year old permanently disabled man
III. a beneficiary upon the death an IRA account holder
IV. a 74-year old man
a. | I and II only | b. | III and IV only | c. | II, III and IV
only | d. | I, II, III and IV |
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39.
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Roth IRAs are sometimes called:
a. | SEP IRAs | b. | SIMPLE IRAs | c. | backloaded
IRAs | d. | nondeductible IRAs |
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40.
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The maximum amount that may be contributed annually to a Roth IRA is:
a. | 100% of earned income | b. | $6,000 | c. | the greater of a or
b | d. | the lesser of a or b |
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41.
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To take a tax-free distribution from a Roth IRA, the contributions must first
remain in the account for:
a. | one tax-year | b. | two tax-years | c. | three
tax-years | d. | five tax-years |
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42.
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Distributions from a SEP-IRA must begin no later than:
a. | retirement | b. | plan termination | c. | age
59½ | d. | age 70½ |
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