Quiz-summary
0 of 10 questions completed
Questions:
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
Information
Certdemy free practice questions
You have already completed the quiz before. Hence you can not start it again.
Quiz is loading...
You must sign in or sign up to start the quiz.
You have to finish following quiz, to start this quiz:
Results
0 of 10 questions answered correctly
Your time:
Time has elapsed
You have reached 0 of 0 points, (0)
Categories
- Not categorized 0%
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
- Answered
- Review
-
Question 1 of 10
1. Question
Which of the following statements is/are incorrect?
I. Many corporations prefer to have the C- Corporation structure over the S-corporation.
II. Laws allow only 100 or fewer shareholders of C- Corporations.
III. Many corporations prefer to have the S- Corporation structure over the C-Corporation structure.
IV. Laws allow only 100 or fewer shareholders of S- CorporationsCorrect
Many corporations prefer to have the S- Corporation structure, but laws allow only for only 100 or fewer shareholders of S- Corporations.
Incorrect
Many corporations prefer to have the S- Corporation structure, but laws allow only for only 100 or fewer shareholders of S- Corporations.
-
Question 2 of 10
2. Question
Which of the following are true about trusts?
I. Trusts are legal entities set up to ensure the execution of the trustor’s, wishes.
II. Trusts do not pay taxes annually similarly to individuals.
III. The trust must pay the taxes that the individual would have normally incurred.
IV. Individuals with trusts pay a very low amount of tax as their trust holds most of their assets and receives income from those assets.Correct
Trusts are legal entities set up to ensure the execution of the trustor’s, or the person contributing assets, wishes. Trusts must pay taxes annually similarly to individuals. In many cases, individuals with trusts pay a very low amount of tax as their trust holds most of their assets and receives income from those assets. The trust must then pay the taxes that the individual would have normally incurred.
Incorrect
Trusts are legal entities set up to ensure the execution of the trustor’s, or the person contributing assets, wishes. Trusts must pay taxes annually similarly to individuals. In many cases, individuals with trusts pay a very low amount of tax as their trust holds most of their assets and receives income from those assets. The trust must then pay the taxes that the individual would have normally incurred.
-
Question 3 of 10
3. Question
Which of the following is not true regarding retirement plans?
I. Roth accounts are funded by after-tax dollars, and the investments grow tax free and are not taxed at withdrawal.
II. Most retirement plans allow investors to defer the taxation of their incomes and earnings on the investments of the retirement plans until they’re withdrawn after age 59 ½.
III. Pensions and other defined benefits were taxed; hence the need for retirement plans.
IV. The tax benefits of retirement plans were legislatively approved to incentivize younger workers to save for retirement.Correct
The tax benefits of retirement plans were legislatively approved to incentivize younger workers to save for retirement, as Social Security was thought to not adequately meet the needs of future retirees and fewer companies were offering defined benefit plans, such as pensions.
Incorrect
The tax benefits of retirement plans were legislatively approved to incentivize younger workers to save for retirement, as Social Security was thought to not adequately meet the needs of future retirees and fewer companies were offering defined benefit plans, such as pensions.
-
Question 4 of 10
4. Question
Regarding the Individual Retirement Account (IRA), which of the following statements are false?
I. A required minimum distribution, or RMD, must be taken by IRA holders before age 70 ½, or a penalty of one half of the RMD will be assessed to the IRA holder.
II. The investments, dividends, and interest are allowed to grow tax free after the investor begins to take distributions.
III. They are usually funded by investors with after-tax dollars.
IV. A tax deduction is granted to the investor in the same year that the investor made the contribution.Correct
A required minimum distribution, or RMD, must be taken by IRA holders after age 70 ½, or a penalty of one half of the RMD will be assessed to the IRA holder.
The investments, dividends, and interest are allowed to grow tax free until the investor begins to take distributions.Incorrect
A required minimum distribution, or RMD, must be taken by IRA holders after age 70 ½, or a penalty of one half of the RMD will be assessed to the IRA holder.
The investments, dividends, and interest are allowed to grow tax free until the investor begins to take distributions. -
Question 5 of 10
5. Question
The following are similarities between Roth-contribution IRAs and Traditional IRAs except:
I. They are funded with after-tax dollars.
II. They may not take distributions before 59 ½ without submitting to a penalty.
III. There is no required minimum distribution starting at age 70 ½ because the funds have already been taxed for both IRAs.
IV. The investments’ capital appreciation, interest, and dividends grow tax free, and no taxes are applied to the distributions that the investor takes, while the investor receives no tax benefit at the time of contribution.Correct
Roth accounts, unlike traditional IRAs, are funded with after-tax dollars. But, unlike traditional IRAs, there is no required minimum distribution starting at age 70 ½ because the funds have already been taxed. Roth IRAs must be funded with earned income.
Incorrect
Roth accounts, unlike traditional IRAs, are funded with after-tax dollars. But, unlike traditional IRAs, there is no required minimum distribution starting at age 70 ½ because the funds have already been taxed. Roth IRAs must be funded with earned income.
-
Question 6 of 10
6. Question
Which of the following statements is/are true regarding pensions?
I. The recipient’s employer contributes assets to the plan on behalf of the employee.
II. They are referred to as defined benefit plans.
III. The employee contributes to his/her pensions plan monthly.
IV. They are invested for the employee to provide the employee with retirement income.Correct
Pensions are a type of qualified retirement plan in which the recipient’s employer contributes assets to the plan on behalf of the employee. These funds are then invested for the employee to provide the employee with retirement income. As the employee does not contribute to pensions plans, pensions are typically referred to as defined benefit plans, referring to their nature as a benefit of employment.
Incorrect
Pensions are a type of qualified retirement plan in which the recipient’s employer contributes assets to the plan on behalf of the employee. These funds are then invested for the employee to provide the employee with retirement income. As the employee does not contribute to pensions plans, pensions are typically referred to as defined benefit plans, referring to their nature as a benefit of employment.
-
Question 7 of 10
7. Question
The following are true about the 401(k) plans except:
I. To encourage retirement saving, a 10 percent penalty payable to the Internal Revenue Service is assessed on distributions taken before age 59 ½.
II. A required minimum distribution, or RMD, must be taken by 401(k) holders after age 70 ½, or a penalty of one half of the RMD will be assessed to the 401(k) holder.
III. A required minimum distribution, or RMD, must be taken by 401 (k) holders after age 70 ½, or a penalty of one half of the RMD will be assessed to the IRA holder.
IV. A penalty of one half of the RMD will be assessed to the 401(k) holder.Correct
A required minimum distribution, or RMD, must be taken by IRA holders after age 70 ½, or a penalty of one half of the RMD will be assessed to the IRA holder.
Incorrect
A required minimum distribution, or RMD, must be taken by IRA holders after age 70 ½, or a penalty of one half of the RMD will be assessed to the IRA holder.
-
Question 8 of 10
8. Question
The following are true about 403(b) plans except:
I. 403(b) plans are employer sponsored tax-advanraged retirement plans.
II. They are made available to all employees that meet certain eligibility requirements of a company that has implemented a 403(b) plan.
III. 403(b) plans are funded with pretax dollars, and taxation is deferred until the investor begins taking distributions.
IV. All distributions are taxed as current income.Correct
403 (b) plans, so named in reference to the section of the Internal Revenue Code that governs such accounts, are employer-sponsored, tax-advantaged retirement plans.
Many investors without sophistication or access to investment planning benefit from 403(b) plans because they are made available to all employees that meet certain eligibility requirements of a company that has implemented a 403(b) plan. 403(b) plans are funded with pretax dollars, and taxation is deferred until the investor begins taking distributions. At that point, all distributions are taxed as current income.Incorrect
403 (b) plans, so named in reference to the section of the Internal Revenue Code that governs such accounts, are employer-sponsored, tax-advantaged retirement plans.
Many investors without sophistication or access to investment planning benefit from 403(b) plans because they are made available to all employees that meet certain eligibility requirements of a company that has implemented a 403(b) plan. 403(b) plans are funded with pretax dollars, and taxation is deferred until the investor begins taking distributions. At that point, all distributions are taxed as current income. -
Question 9 of 10
9. Question
Regarding Nonqualified retirement plans, which of the following is/are true?
I. The plans allow some tax deduction to be taken.
II. They are not governed by the Employee Retirement Income Security Act, or ERISA.
III. The contributions to the plans on the employee’s behalf are often treated as taxable income.
IV. Nonqualified retirement plans are often seen in the execution of deferred compensation plans and bonuses to executives.Correct
Nonqualified retirement plans are those plans that are not governed by the Employee Retirement Income Security Act, or ERISA. As such, they are not required to follow the guidelines and laws established therein. Although the plans do not allow a tax deduction to be taken, they are allowed to grow tax deferred.
Incorrect
Nonqualified retirement plans are those plans that are not governed by the Employee Retirement Income Security Act, or ERISA. As such, they are not required to follow the guidelines and laws established therein. Although the plans do not allow a tax deduction to be taken, they are allowed to grow tax deferred.
-
Question 10 of 10
10. Question
The following are true under the Employee Retirement Income Security Act, except:
I. ERISA plans provides incentives in the form of income reduction and deferral of taxation on investment earnings.
II. ERISA provides tax incentives for employers.
III. Per ERISA, all profit-sharing plans and corporate pensions must be established through the use of a trust.
IV. ERISA was enacted to protect the rights of employer corporations.Correct
ERISA provides tax incentives for employees to save money for retirement.
ERISA was enacted to protect the rights of individual investors.Incorrect
ERISA provides tax incentives for employees to save money for retirement.
ERISA was enacted to protect the rights of individual investors.