Retirement Planning Exam 2 Question with
complete solution
In August 2019 Paul turned 70 ½. He was a participant in his former
employers profit sharing plan. His profit sharing plan and account
balance is $600,000 on December 31st 2018, $450,000 on December
31st 2019. According to the uniform life table, the factors for ages 70,
71, and 72 are 27.4, 26.5, and 25.6. What is the amount of Paul's
required minimum distribution for 2020? - Correct Answers ✅Old
rules (Under old rules he has to take distribution at 70 1/2).
600k @ end of 2018
450k @ end of 2019
Turns 70 1/2 at end of 2019 so we use prior ending year value.
$450k/26.5 = uniform life factor of $16,981
Which of the following qualified plan distributions are subject to a 10%
early withdraw penalty?
1. Carolyn, age 56, currently employed by UBEIT Corporation, takes a
$125,000 distribution from the UBEIT 401(k) plan.
2. Brad, age 60, takes a $1,000,000 distribution from his employer's
profit sharing plan. Ten days after receiving the $800,000 check
(reduced for 20% withholding), Brad deposited the $800,000 into a new
IRA account.
3. Tara, age 22, withdraws $2,000 of her contributions from her 401(k).
- Correct Answers ✅1 & 3
Vance has a vested account balance in his employer-sponsored
qualified profit sharing plan of $40,000. He has two years of service
,Retirement Planning Exam 2 Question with
complete solution
with his employer and the plan follows the least generous graduated
vesting schedule permitted for a profit sharing plan under PPA. If Vance
has an outstanding loan balance within the prior 12 months of $15,000,
what is the maximum loan Vance could take from this qualified plan,
assuming the plan permitted loans? - Correct Answers ✅The
maximum loan an individual can take is the lesser of $50,000 or 50% of
their vested account balance
Take the max he can take as a loan, subtract his existing loan, and the
remainder is what he can potentially take.
the maximum loan would be 50% of $40,000, or $20,000. However,
since Vance had an outstanding loan balance of $15,000 within 12
months, the maximum loan available must be reduced by $15,000. In
this case, the maximum loan Vance could take from the qualified plan is
$5,000 ($20,000-$15,000).
Which of the following is/are elements of an effective waiver for a
preretirement survivor annuity?
1. The waiver must be signed within six months of death.
2. The waiver must be signed by a plan participant .
3. The waiver must be signed by the nonparticipant spouse and
notarized or signed by a plan official.
,Retirement Planning Exam 2 Question with
complete solution
A. 3 only
B. 1 and 2
C. 2 and 3
D. 1, 2, and 3 - Correct Answers ✅Answer: A
Only the nonparticipant spouse must sign the waiver.
Paper Chasers, a shop that specializes in confetti has a 401(k) plan that
allows plan loans up to the legal limit allowed by law. Participants must
repay the loans under the most generous repayment schedule available
by law. Paper Chasers plan has the following employee information:
Employee/401kbal/outstanding loan
Sara/200k/0
Kay/250k/19,900
Judy/14k/2,000
Brian/35k/0
Which is correct:
A. If Kay repays her $19,000 loan by the end of the year, she may take a
loan of $50,000 anytime next year.
, Retirement Planning Exam 2 Question with
complete solution
B. Sara can borrow $100,000 (50% of her vested account balance) from
her account.
C. The maximum Judy can borrow from her account is $8,000.
D. Brian could borrow $17,500 from his plan for the purchase of a
personal residence, but he would have to repay the loan within ten
years - Correct Answers ✅A is false because its a rolling 12 months
B No lesser of 50k or half her balance - so 50k
D is 30 years
C is Correct
Balance of 14k means you can only take 10k. already has 2k out so 10k -
2k = $8,000
Seth owns 50 percent of SM LLC, where he is the CEO. He turned 70 on
May 3rd of 2019. He continues to participate in the SM LLC 401(k) plan
and receive contributions to the profit sharing plan. Which of the
following is correct regarding minimum distributions from the qualified
plan?
A. Since Seth is still working, he does not have to take minimum
distributions until after he retires
complete solution
In August 2019 Paul turned 70 ½. He was a participant in his former
employers profit sharing plan. His profit sharing plan and account
balance is $600,000 on December 31st 2018, $450,000 on December
31st 2019. According to the uniform life table, the factors for ages 70,
71, and 72 are 27.4, 26.5, and 25.6. What is the amount of Paul's
required minimum distribution for 2020? - Correct Answers ✅Old
rules (Under old rules he has to take distribution at 70 1/2).
600k @ end of 2018
450k @ end of 2019
Turns 70 1/2 at end of 2019 so we use prior ending year value.
$450k/26.5 = uniform life factor of $16,981
Which of the following qualified plan distributions are subject to a 10%
early withdraw penalty?
1. Carolyn, age 56, currently employed by UBEIT Corporation, takes a
$125,000 distribution from the UBEIT 401(k) plan.
2. Brad, age 60, takes a $1,000,000 distribution from his employer's
profit sharing plan. Ten days after receiving the $800,000 check
(reduced for 20% withholding), Brad deposited the $800,000 into a new
IRA account.
3. Tara, age 22, withdraws $2,000 of her contributions from her 401(k).
- Correct Answers ✅1 & 3
Vance has a vested account balance in his employer-sponsored
qualified profit sharing plan of $40,000. He has two years of service
,Retirement Planning Exam 2 Question with
complete solution
with his employer and the plan follows the least generous graduated
vesting schedule permitted for a profit sharing plan under PPA. If Vance
has an outstanding loan balance within the prior 12 months of $15,000,
what is the maximum loan Vance could take from this qualified plan,
assuming the plan permitted loans? - Correct Answers ✅The
maximum loan an individual can take is the lesser of $50,000 or 50% of
their vested account balance
Take the max he can take as a loan, subtract his existing loan, and the
remainder is what he can potentially take.
the maximum loan would be 50% of $40,000, or $20,000. However,
since Vance had an outstanding loan balance of $15,000 within 12
months, the maximum loan available must be reduced by $15,000. In
this case, the maximum loan Vance could take from the qualified plan is
$5,000 ($20,000-$15,000).
Which of the following is/are elements of an effective waiver for a
preretirement survivor annuity?
1. The waiver must be signed within six months of death.
2. The waiver must be signed by a plan participant .
3. The waiver must be signed by the nonparticipant spouse and
notarized or signed by a plan official.
,Retirement Planning Exam 2 Question with
complete solution
A. 3 only
B. 1 and 2
C. 2 and 3
D. 1, 2, and 3 - Correct Answers ✅Answer: A
Only the nonparticipant spouse must sign the waiver.
Paper Chasers, a shop that specializes in confetti has a 401(k) plan that
allows plan loans up to the legal limit allowed by law. Participants must
repay the loans under the most generous repayment schedule available
by law. Paper Chasers plan has the following employee information:
Employee/401kbal/outstanding loan
Sara/200k/0
Kay/250k/19,900
Judy/14k/2,000
Brian/35k/0
Which is correct:
A. If Kay repays her $19,000 loan by the end of the year, she may take a
loan of $50,000 anytime next year.
, Retirement Planning Exam 2 Question with
complete solution
B. Sara can borrow $100,000 (50% of her vested account balance) from
her account.
C. The maximum Judy can borrow from her account is $8,000.
D. Brian could borrow $17,500 from his plan for the purchase of a
personal residence, but he would have to repay the loan within ten
years - Correct Answers ✅A is false because its a rolling 12 months
B No lesser of 50k or half her balance - so 50k
D is 30 years
C is Correct
Balance of 14k means you can only take 10k. already has 2k out so 10k -
2k = $8,000
Seth owns 50 percent of SM LLC, where he is the CEO. He turned 70 on
May 3rd of 2019. He continues to participate in the SM LLC 401(k) plan
and receive contributions to the profit sharing plan. Which of the
following is correct regarding minimum distributions from the qualified
plan?
A. Since Seth is still working, he does not have to take minimum
distributions until after he retires
