CRPC Module 7 Exam | Questions And Answers Latest {2024- 2025} A+ Graded | 100%
Verified
In-service withdrawals prior to age 62 are not permitted from which of the following? - cash balance
plans
(In-service withdrawals at any age may be permitted from profit sharing plans (including ESOPs and
stock bonus plans), assuming certain other requirements are met. In-service withdrawals prior to age 62
are not permitted from any pension plan, including cash balance plans.)
The IRS permits hardship withdrawals from 401(k) plans in cases of "immediate and heavy financial
need." Which of the following is not considered immediate and heavy? - payments to prevent defaulting
on a mortgage for a second home
(Although payments to prevent eviction from a primary residence are considered immediate and heavy,
payments for a second home are not. The other options are considered immediate and heavy expenses.)
Before rolling assets from an employer sponsored plan to an IRA one should consider which of the
following? - 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)
(Prior to doing a rollover of assets from an employer plan to IRA there are number of factors need to be
considered and compared. These include an examination of fees, services offered, investment options,
when penalty free withdrawals are available, when required minimum distributions may be required
and protection of assets from creditors.)
Taxes may be deferred on a qualified plan distribution if it is rolled over to an IRA, TSA, SEP,
governmental 457 plan, or to another qualified plan. All are true regarding rollovers except - they
generally result in less money for retirement.
(Rollovers generally result in more money for retirement. Tax deferral enables the entire distribution to
continue to earn tax-deferred money. Taking a lump-sum distribution results in immediate taxation.
Amounts distributed from qualified plans must be transferred to a new account within 60 days of
receipt to avoid taxation. All distributions from the named tax-deferred plans result in taxation as
ordinary income, capital gains treatment is not available.)
, All of the following are disadvantages to performing an indirect rollover from a qualified plan to an
existing IRA except - 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.)
Not all distributions from a qualified plan may be rolled over into a traditional IRA. Which one of the
following distributions is an "eligible rollover distribution"? - the vested cash balance in the plan
(The participant's vested cash balance in the plan may be rolled over to an existing IRA. Distributions
that are part of a series of substantially equal payments for the life of the participant or the joint lives of
the participant and the participant's designated beneficiary are not eligible to be rolled over. Hence,
such distributions are not eligible rollover distributions. Neither are dividends on employer securities
held by the plan that are distributed in cash to participants or the taxable cost of life insurance provided
by the plan.)
When must the designated beneficiary be determined in order to avoid having to distribute the full IRA
balance under the 5-year rule? - September 30 of the year following the participant's death.
(The designated beneficiary must be determined by September 30 of the year following the participant's
death in order to avoid having to distribute the full IRA balance under the 5-year rule.)
Distributions from qualified plans, 403(b) plans, SEPs, SIMPLEs, and IRAs are assessed a 10% penalty if
they are taken before age 59½. Which of the following is not an exception to this penalty? - The
distribution is made to pay homeowners insurance.
(The distribution is made to pay homeowners insurance.)
Which of the following is not a step in determining the best plan distribution option? - compare the
options to what the plan may offer in the future
(Reviewing the distribution options is the first step in determining the best plan distribution option. In
order, the other steps are (2) project cash needs and sources of income, (3) calculate plan payments and
tax implications, and (4) determine which option is most suitable. Comparing options that may be
available in the future is not one of the steps.)
Once selected, beneficiaries of a qualified profit sharing plan can be changed - at any time.
(Beneficiaries of a qualified profit sharing plan, normally, can be changed at any time.)
Verified
In-service withdrawals prior to age 62 are not permitted from which of the following? - cash balance
plans
(In-service withdrawals at any age may be permitted from profit sharing plans (including ESOPs and
stock bonus plans), assuming certain other requirements are met. In-service withdrawals prior to age 62
are not permitted from any pension plan, including cash balance plans.)
The IRS permits hardship withdrawals from 401(k) plans in cases of "immediate and heavy financial
need." Which of the following is not considered immediate and heavy? - payments to prevent defaulting
on a mortgage for a second home
(Although payments to prevent eviction from a primary residence are considered immediate and heavy,
payments for a second home are not. The other options are considered immediate and heavy expenses.)
Before rolling assets from an employer sponsored plan to an IRA one should consider which of the
following? - 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)
(Prior to doing a rollover of assets from an employer plan to IRA there are number of factors need to be
considered and compared. These include an examination of fees, services offered, investment options,
when penalty free withdrawals are available, when required minimum distributions may be required
and protection of assets from creditors.)
Taxes may be deferred on a qualified plan distribution if it is rolled over to an IRA, TSA, SEP,
governmental 457 plan, or to another qualified plan. All are true regarding rollovers except - they
generally result in less money for retirement.
(Rollovers generally result in more money for retirement. Tax deferral enables the entire distribution to
continue to earn tax-deferred money. Taking a lump-sum distribution results in immediate taxation.
Amounts distributed from qualified plans must be transferred to a new account within 60 days of
receipt to avoid taxation. All distributions from the named tax-deferred plans result in taxation as
ordinary income, capital gains treatment is not available.)
, All of the following are disadvantages to performing an indirect rollover from a qualified plan to an
existing IRA except - 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.)
Not all distributions from a qualified plan may be rolled over into a traditional IRA. Which one of the
following distributions is an "eligible rollover distribution"? - the vested cash balance in the plan
(The participant's vested cash balance in the plan may be rolled over to an existing IRA. Distributions
that are part of a series of substantially equal payments for the life of the participant or the joint lives of
the participant and the participant's designated beneficiary are not eligible to be rolled over. Hence,
such distributions are not eligible rollover distributions. Neither are dividends on employer securities
held by the plan that are distributed in cash to participants or the taxable cost of life insurance provided
by the plan.)
When must the designated beneficiary be determined in order to avoid having to distribute the full IRA
balance under the 5-year rule? - September 30 of the year following the participant's death.
(The designated beneficiary must be determined by September 30 of the year following the participant's
death in order to avoid having to distribute the full IRA balance under the 5-year rule.)
Distributions from qualified plans, 403(b) plans, SEPs, SIMPLEs, and IRAs are assessed a 10% penalty if
they are taken before age 59½. Which of the following is not an exception to this penalty? - The
distribution is made to pay homeowners insurance.
(The distribution is made to pay homeowners insurance.)
Which of the following is not a step in determining the best plan distribution option? - compare the
options to what the plan may offer in the future
(Reviewing the distribution options is the first step in determining the best plan distribution option. In
order, the other steps are (2) project cash needs and sources of income, (3) calculate plan payments and
tax implications, and (4) determine which option is most suitable. Comparing options that may be
available in the future is not one of the steps.)
Once selected, beneficiaries of a qualified profit sharing plan can be changed - at any time.
(Beneficiaries of a qualified profit sharing plan, normally, can be changed at any time.)
