Reference no: EM133272836

Question 1.

Sandi wants to convert her traditional IRA to a Roth IRA. The current IRA account value is $100,000. If Sandi follows through, how will the conversion be taxed?

a) $100,000, as capital gains

b) $100,000, as ordinary income

c) $10,000, as ordinary income with $90,000 carry-forward

d) $90,000, as capital gains with $10,000 carry-forward

Question 2.

IDGTs work well when interest rates are low.

True

False

Question 3.

The duties of fiduciaries include all of the following, except

a) act with the care, skill, prudence, and diligence under the prevailing circumstances that a "prudent man" would act in a like capacity

b) select moderate- to high-risk investments that will maximize gains in the plan

c) follow the provisions of the documents governing the plan, unless inconsistent with ERISA provisions

d) act for the exclusive purpose of providing benefits to participants and their beneficiaries

e) all of the above are duties of fiduciaries

Question 4.

John Appleton, owner of Appleton Enterprises, Inc., is considering installing a retirement plan in his company. He wants a plan that allows the use of Social Security integration. Which of the following plans would permit this?

a) cash balance plan

b) typical defined contribution plan

c) typical defined cost plan

d) a and b only

e) a and c only

Question 5.

If there are two or more children to whom a parent wishes to make gifts, one custodial account may be established for all the children.

Question 6.

True

False

Question 7.

The employee benefit plans of state, federal, or local governments or governmental organizations are exempt from ERISA.

True

False

Question 8.

Jamal and Tamika Feron live in a community property state. To obtain a new income tax basis equal to the fair market value for any community property held at death of either spouse, they must use a Tax Basis Irrevocable Trust.

Question 9.

True

False

Question 10.

The local government in Central City is considering using an alternative to a tax deferred annuity as a retirement plan. Which of the following could Central City Government use?

a) 401(k) plan

b) SIMPLE 401(k)

c) city governments can only use a tax deferred annuity

d) Section 403(b)

e) SIMPLE IRA

Question 11.

What amount is included in the executive's AMT calculation when an ISO is exercised?

a) fair market value of stock at time of grant

b) option price of stock at time of grant

c) excess of the stock's fair market value over the option price at time of exercise

d) excess of the option price over the stock's fair market value at time of exercise

Question 12.

If the estate qualifies for the Section 6166 deferral, under what circumstances may the tax be accelerated?

I. The tax may not be accelerated.

II. When all or a significant portion of the business is disposed or liquidated.

III. When interest or installment payments are not made within six months of the due date.

a) I only

b) II only

c) II and III

d) I and II