Question : 51. Jody a physician (not covered by a retirement plan) with : 1313533

 

51. Jody is a physician (not covered by a retirement plan) with a salary of $40,000 from the hospital where she is employed. She supports her husband, Andre, who sells art work and has no earned income. Both are in their twenties. What is the maximum total amount that Jody and Andre may contribute to their IRAs and deduct for the 2014 tax year?

a. $5,500

b. $5,000

c. $11,000

d. $10,000

e. None of the above

52. Which of the following taxpayers qualifies for the maximum individual retirement account deduction for 2014?

a. Married taxpayers, neither of whom is covered by a qualified retirement plan, with total adjusted gross income, all earned, of $85,000

b. A single taxpayer, who is covered by a qualified retirement plan, with adjusted gross income of $80,000

c. A single taxpayer, who is not covered by a qualified retirement plan, with no earned income but with unearned income of $12,000

d. Married taxpayers, only one of whom is covered by a qualified retirement plan, with total adjusted gross income of $190,000

e. None of the above qualify for the maximum deduction

53. Steven is 27 years old and has a total AGI of $110,000 in 2014. In 2014, he gets pneumonia and has a medical bill that totals $7,500. He withdraws $7,500 from his traditional IRA to pay for the bill. Which of the following is true?

a. He is not subject to penalties on the IRA withdrawal because it was for medical expenses.

b. He is not subject to penalties on the IRA withdrawal because he was disabled by pneumonia for 2 weeks.

c. He is subject to penalties on the IRA withdrawal because a person may not take a withdrawal from a traditional IRA until they are 59 ½ years old no matter what.

d. He is subject to penalties on the IRA withdrawal because the medical bill was not greater than 10 percent of his AGI.

e. None of the above is correct.

54. Choose the incorrect answer. Money removed from a traditional IRA is taxable as ordinary income and subject to a 10 percent penalty except for taxpayers who are:

a. Paying the costs of higher education, including tuition, fees, books, and room and board for a dependent child

b. Withdrawing up to $20,000 of first-time home-buying expenses

c. Using the withdrawals for medical expenses in excess of 10 percent of their AGI, for persons younger than 65 years old

d. Over 59 1/2 years old

55. Donald, a 40-year-old married taxpayer, has a salary of $55,000 and interest income of $6,000. What is the maximum amount Donald can contribute to a Roth IRA?

a. $550

b. $610

c. $1,220

d. $3,000

e. $5,500

56. Under the Keogh plan provisions, deductible contributions to a qualified retirement plan on behalf of a self-employed individual whose net earned income is $20,000 are limited to:

a. $1,500

b. $2,000

c. $4,000

d. $5,000

e. None of the above

57. Contributions by a self-employed individual to a Keogh plan for 2014 are limited to the lesser of 20 percent of net earned income or:

a. $43,000

b. $50,000

c. $51,000

d. $52,000

e. None of the above

58. Which of the following statements is correct?

a. Contributions to Keogh plans by self-employed taxpayers are generally limited to the lesser of 15 percent of their net earned income (before the Keogh deduction) or $45,000.

b. The contribution limits for SEPs (Simplified Employee Pension) are the lesser of 20 percent of net self-employment income or $52,000 for a self-employed taxpayer.

c. Employees may elect to make annual contributions to 401(k) plans up to the lesser of 15 percent of their net earned income (before the 401(k) deduction) or $45,000.

d. The contribution limits for SEPs are a maximum of $17,500 ($23,000 for taxpayers 50 or older).

59. Paul earns $55,000 during the current year. His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul. The amount of the contribution for the year is based on Paul’s desire to have a monthly retirement benefit of $3,500. What type of retirement plan is this?

a. Defined benefit plan

b. Defined contribution plan

c. Employee earnings plan

d. Profit sharing plan

e. None of the above

60. Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years. The corporation has a qualified retirement plan and contributes $2,000 during 2014 for Ursula. How should Ursula treat the $2,000 contribution made on her behalf by the corporation?

a. The $2,000 and any earnings thereon must be included in Ursula’s 2014 gross income.

b. Only the earnings on the $2,000 contribution must be included in Ursula’s 2014 gross income.

c. Ursula is not required to include either the $2,000 contribution or the earnings thereon in her 2014 gross income.

d. Ursula must include only $100 (1/20 of the $2,000 contribution) in her gross income for 2014, but the same amount must be included in gross income for the following 19 years.

e. None of the above.

61. Polly, age 45, participates in her employer’s Section 401(k) plan which allows employees to contribute up to 15 percent of their salary. Her annual salary is $100,000 in 2014. What is the maximum she can contribute to this plan on a tax-deferred basis under a salary reduction agreement?

a. $20,500

b. $15,000

c. $17,500

d. $20,000

e. None of the above

62. Which of the following statements is true?

a. A distribution rollover from a retirement plan can only be done as a direct transfer from one account to another account.

b. The trustee must withhold 10 percent of the amount distributed whenever assets are transferred from one retirement plan to another retirement plan.

c. If a taxpayer decides to rollover an IRA to a new account, then the whole IRA must be rolled over.

d. A taxpayer is allowed only one direct transfer each year from one retirement account to another retirement account.

e. There are no current-year tax consequences for a direct transfer.

63. Which of the following statements is true of a distribution rollover (not a trustee-to-trustee transfer) from a retirement plan?

a. The taxpayer must instruct the trustee of the retirement plan to transfer assets to the trustee of another plan.

b. No withholding is required.

c. In one year, there is no limit to the number of times a taxpayer can request a distribution rollover from one IRA to another IRA.

d. Assuming there are no unusual events, the taxpayer has a maximum of 60 days in which to transfer funds to a new plan.

e. All of the above are true.