XCEL CHAPTER 9 EXAM 2025
QUESTIONS AND ANSWERS
Which plan is intended to be used by a sole proprietor and the employees of that business? -
ANS Keogh Plan
In an individual retirement account (IRA), rollover contributions are: - ANS not limited by
dollar amount
An employer that offers a qualified retirement plan to its employees is eligible to: -
ANS make tax-deductible contributions to the plan
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take
the required minimum distributions from their qualified retirement plan? - ANS 50%
Which of the following is TRUE about a qualified retirement that is "top heavy"? - ANS more
than 60% of plan assets are in key employee accounts
Which product would best serve a retired individual looking to invest a lump-sum of money
through an insurance company? - ANS annuity
Tom has a qualified retirement plan with his employer that is currently considered to be 80%
"vested". How can this be interpreted? - ANS if Tom's employment is terminated, 20% of the
funds would be forfeited
1 @COPYRIGHT THEBRIGHT 2025/2026
, In a qualified retirement plan, the yearly contributions to an employee's account: - ANS are
restricted to maximum levels set by the IRS
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at
what age? - ANS 59 1/2
When funds are shifted straight from one IRA to another IRA, what percentage of the tax is
withheld? - ANS none
Which of these retirement plans can be started by an employee, even if another plan is in
existence? - ANS Individual Retirement Account (IRA)
Which tax would an IRA participant be subjected to on distributions received prior to age 59
1/2? - ANS ordinary income tax and a 10% tax penalty for early withdrawal
How long does an individual have to "rollover" funds from an IRA or qualified plan? - ANS 60
days
Premature IRA distributions are assessed a penalty tax of: - ANS 10%
An individual working part-time has an annual income of $25,000. If this individual has an IRA,
what is the maximum deductible IRA contribution allowable? - ANS $2,500
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid: -
ANS mandatory income tax withholding on the transfer amount
What is the maximum number of employees (earning at least $5,000) that an employer can
have in order to start a SIMPLE retirement plan? - ANS 100
2 @COPYRIGHT THEBRIGHT 2025/2026
QUESTIONS AND ANSWERS
Which plan is intended to be used by a sole proprietor and the employees of that business? -
ANS Keogh Plan
In an individual retirement account (IRA), rollover contributions are: - ANS not limited by
dollar amount
An employer that offers a qualified retirement plan to its employees is eligible to: -
ANS make tax-deductible contributions to the plan
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take
the required minimum distributions from their qualified retirement plan? - ANS 50%
Which of the following is TRUE about a qualified retirement that is "top heavy"? - ANS more
than 60% of plan assets are in key employee accounts
Which product would best serve a retired individual looking to invest a lump-sum of money
through an insurance company? - ANS annuity
Tom has a qualified retirement plan with his employer that is currently considered to be 80%
"vested". How can this be interpreted? - ANS if Tom's employment is terminated, 20% of the
funds would be forfeited
1 @COPYRIGHT THEBRIGHT 2025/2026
, In a qualified retirement plan, the yearly contributions to an employee's account: - ANS are
restricted to maximum levels set by the IRS
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at
what age? - ANS 59 1/2
When funds are shifted straight from one IRA to another IRA, what percentage of the tax is
withheld? - ANS none
Which of these retirement plans can be started by an employee, even if another plan is in
existence? - ANS Individual Retirement Account (IRA)
Which tax would an IRA participant be subjected to on distributions received prior to age 59
1/2? - ANS ordinary income tax and a 10% tax penalty for early withdrawal
How long does an individual have to "rollover" funds from an IRA or qualified plan? - ANS 60
days
Premature IRA distributions are assessed a penalty tax of: - ANS 10%
An individual working part-time has an annual income of $25,000. If this individual has an IRA,
what is the maximum deductible IRA contribution allowable? - ANS $2,500
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid: -
ANS mandatory income tax withholding on the transfer amount
What is the maximum number of employees (earning at least $5,000) that an employer can
have in order to start a SIMPLE retirement plan? - ANS 100
2 @COPYRIGHT THEBRIGHT 2025/2026
