CRPC - Module #7 Questions with verified answers
A ____ penalty is imposed for failing to take the required minimum distribution
(RMD). Ans✓✓✓ 50%
(The penalty for failing to take the RMD is 50% of the difference between what
should have been taken and what was taken.)
A direct rollover is a transaction in which benefits from a qualified plan are rolled
over directly to Ans✓✓✓ another eligible retirement plan.
(another eligible retirement plan.
A direct rollover may be accomplished by any reasonable means of direct
payment to an eligible retirement plan, including a wire transfer or mailing of a
check negotiable only by the plan's trustee. Using a conduit IRA is a means of an
indirect rollover.)
A qualified plan must withhold 20% of any distribution that is Ans✓✓✓ A
qualified plan must withhold 20% of any distribution that is
(The 20% withholding rule does not apply to direct rollover distributions or
trustee-to-trustee transfers; the 20% withholding rule does apply to indirect
rollover distributions, such as a 60-day rollover.)
A trustee-to-trustee transfer is an example of a Ans✓✓✓ direct rollover.
(A trustee-to-trustee transfer is an example of a direct rollover. A 60-day rollover
would be an example of an indirect rollover. A conduit IRA is used to shift assets
from the qualified plan of one employer to the qualified plan of another employer
using the conduit IRA as an intermediate step.)
Alicia has contributed $8,000 to a Roth IRA over the past four years. The account
has grown to $10,000 with investment earnings. She is facing a financial bind and
, needs to withdraw $9,000. She will have to pay income tax and a 10% penalty on
Ans✓✓✓ $1,000.
(Since the Roth contributions were made with after-tax dollars, Alicia can
withdraw her contributions first. She could withdraw the entire $8,000 that she
has contributed without any tax or penalty. Only $1,000 of her withdrawal will be
subject to income tax or penalty.)
All of the following are characteristics of a qualified longevity annuity contracts
(QLACs) except Ans✓✓✓ the participant can elect either a fixed or variable
annuity.
(QLACs must be fixed (not variable) annuities. The other statements are true
regarding QLACs)
All of the following are disadvantages to performing an indirect rollover from a
qualified plan to an existing IRA except Ans✓✓✓ the entire distribution will be
subject to immediate taxation.
(By rolling over assets to an existing IRA, the plan assets less the amount withheld
escape immediate taxation. Taxes are deferred until the participant begins
withdrawing money. A mandatory 20% withholding is imposed on a qualified plan
distribution if the plan issues a check to the participant. Finally, if an indirect
rollover is not completed within 60-days the full distribution amount will be
taxed.)
Before rolling assets from an employer sponsored plan to an IRA one should
consider which of the following? Ans✓✓✓ All of the above. (the difference in
creditor protection between the two savings vehicles
the difference in when the 10% penalty will apply to distributions
the difference in RMD rules that apply to the two savings vehicles)
A ____ penalty is imposed for failing to take the required minimum distribution
(RMD). Ans✓✓✓ 50%
(The penalty for failing to take the RMD is 50% of the difference between what
should have been taken and what was taken.)
A direct rollover is a transaction in which benefits from a qualified plan are rolled
over directly to Ans✓✓✓ another eligible retirement plan.
(another eligible retirement plan.
A direct rollover may be accomplished by any reasonable means of direct
payment to an eligible retirement plan, including a wire transfer or mailing of a
check negotiable only by the plan's trustee. Using a conduit IRA is a means of an
indirect rollover.)
A qualified plan must withhold 20% of any distribution that is Ans✓✓✓ A
qualified plan must withhold 20% of any distribution that is
(The 20% withholding rule does not apply to direct rollover distributions or
trustee-to-trustee transfers; the 20% withholding rule does apply to indirect
rollover distributions, such as a 60-day rollover.)
A trustee-to-trustee transfer is an example of a Ans✓✓✓ direct rollover.
(A trustee-to-trustee transfer is an example of a direct rollover. A 60-day rollover
would be an example of an indirect rollover. A conduit IRA is used to shift assets
from the qualified plan of one employer to the qualified plan of another employer
using the conduit IRA as an intermediate step.)
Alicia has contributed $8,000 to a Roth IRA over the past four years. The account
has grown to $10,000 with investment earnings. She is facing a financial bind and
, needs to withdraw $9,000. She will have to pay income tax and a 10% penalty on
Ans✓✓✓ $1,000.
(Since the Roth contributions were made with after-tax dollars, Alicia can
withdraw her contributions first. She could withdraw the entire $8,000 that she
has contributed without any tax or penalty. Only $1,000 of her withdrawal will be
subject to income tax or penalty.)
All of the following are characteristics of a qualified longevity annuity contracts
(QLACs) except Ans✓✓✓ the participant can elect either a fixed or variable
annuity.
(QLACs must be fixed (not variable) annuities. The other statements are true
regarding QLACs)
All of the following are disadvantages to performing an indirect rollover from a
qualified plan to an existing IRA except Ans✓✓✓ the entire distribution will be
subject to immediate taxation.
(By rolling over assets to an existing IRA, the plan assets less the amount withheld
escape immediate taxation. Taxes are deferred until the participant begins
withdrawing money. A mandatory 20% withholding is imposed on a qualified plan
distribution if the plan issues a check to the participant. Finally, if an indirect
rollover is not completed within 60-days the full distribution amount will be
taxed.)
Before rolling assets from an employer sponsored plan to an IRA one should
consider which of the following? Ans✓✓✓ All of the above. (the difference in
creditor protection between the two savings vehicles
the difference in when the 10% penalty will apply to distributions
the difference in RMD rules that apply to the two savings vehicles)
