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"Bridge jobs" describe periods of partial retirement for older workers. Which one of the
following statements regarding bridge jobs is not true?
They generally represent a move up the socioeconomic ladder, from less-skilled to
more-skilled jobs.
They are less likely to include health insurance coverage.
They generally allow more flexibility than employees' previous full-time jobs. -
CORRECT ANSWERS-They generally represent a move up the socioeconomic ladder,
from less-skilled to more-skilled jobs.
Bridge jobs generally represent a move down the socioeconomic ladder, from more-
skilled to less-skilled jobs or from white-collar to blue-collar jobs. They are also likely to
pay less and are less likely to offer pension plans or health insurance coverage. On the
other hand, due to their temporary or part-time nature, bridge jobs generally allow more
flexibility than full-time career positions.
"Golden parachute" agreements may include all of the following, except
cash.
company stock.
medical and life insurance.
reduced pension benefits. - CORRECT ANSWERS-reduced pension benefits.
Golden parachute agreements may include various combinations of cash, company
stock, medical and life insurance, extra pension benefits, and other benefits.
2017 Earnings cap for singles? - CORRECT ANSWERS-$16,920
A Cash Flow statement is used to calculate what? And what does it have on it? -
CORRECT ANSWERS-Inflows and out flows. Not assets and liabilities.
A direct rollover is a transaction in which benefits from a qualified plan are rolled over
directly to
the individual with a check in their name.
,a participant's checking or savings account.
another eligible retirement plan.
a conduit IRA. - CORRECT ANSWERS-another eligible retirement plan.
A direct rollover may be accomplished by any reasonable means of direct payment to
an eligible retirement plan, including a wire transfer or mailing of a check negotiable
only by the plan's trustee. Using a conduit IRA is a means of an indirect rollover.
A distribution cannot be made from a TSA until the employee does which of the
following? - CORRECT ANSWERS-Distributions can be made when an employee
separates from service, attains age 591⁄2, becomes disabled or dies, or qualifies under
hardship rules.
A penalty is imposed for failing to take the required minimum distribution (RMD).
10%
20%
50%
100% - CORRECT ANSWERS-50%
The penalty for failing to take the RMD is 50% of the difference between what should
have been taken and what was taken.
A power of attorney is an effective tool for incapacity planning if
it is a general power of attorney.
it is a durable power of attorney.
it is a springing power of attorney.
both b and c. - CORRECT ANSWERS-both b and c.
A durable power of attorney continues after a principal's incapacity, and a springing
power of attorney becomes effective when the principal becomes incapacitated. The
general power of attorney is not an effective tool for incapacity planning for a simple
reason: The agent's authority ceases when the principal either dies or becomes
incapacitated.
A qualified plan must withhold 20% of any distribution that is
part of a trustee-to-trustee transfer.
rolled to a conduit IRA.
part of a lifetime annuity.
going to be rolled over to another qualified plan within 60-days. - CORRECT
ANSWERS-going to be rolled over to another qualified plan within 60-days.
The 20% withholding rule does not apply to direct rollover distributions or trustee-to-
trustee transfers; the 20% withholding rule does apply to indirect rollover distributions,
such as a 60-day rollover.
,A Roth IRA distribution is considered to be "qualified" if... - CORRECT ANSWERS-...a
five-year holding period is met and the distribution is made after the attainment of age
591⁄2, death, or disability, or if it is made for the purchase of a first-time home
(maximum $10,000).
A standardized Medigap plan is designed to cover
long-term care expenses when treatment lasts longer than 100 days.
Medicare-approved charges that are not paid by Medicare.
charges that are considered nonmedical and are not covered by Medicare. -
CORRECT ANSWERS-Medicare-approved charges that are not paid by Medicare.
Medigap insurance is designed to supplement Medicare's benefits by filling in some of
what Medicare does not cover, such as deductibles and coinsurance; it covers only
Medicare-approved charges. Standardized Medigap plans pay only for long-term care
while the beneficiary qualifies for benefits from Medicare, and is limited to paying the
coinsurance from the 21st through 100th days.
A trustee-to-trustee transfer is an example of a
direct rollover.
indirect rollover.
conduit rollover.
60-day rollover. - CORRECT ANSWERS-direct rollover.
A trustee-to-trustee transfer is an example of a direct rollover. A 60-day rollover would
be an example of an indirect rollover. A conduit IRA is used to shift assets from the
qualified plan of one employer to the qualified plan of another employer using the
conduit IRA as an intermediate step.
A worker's primary insurance amount (PIA) is the amount they receive from Social
Security if... - CORRECT ANSWERS-...he or she began payments at full retirement
age.
Active participation in what retirement plans for any part of a plan year ending within the
individual's taxable year may restrict his or her ability to deduct contributions to an IRA?
- CORRECT ANSWERS-a qualified pension, profit sharing, stock bonus, money
purchase, SIMPLE
401(k) plan, or Roth 401(k) plan;
a qualified plan established for employees by a federal, state, or local
government or their subdivisions, other than a Section 457 plan;
a tax-sheltered annuity plan (TSA) (also known as Section 403(b) plan) for
employees of public schools and certain tax-exempt organizations;
, a simplified employee pension (SEP); or
a savings incentive match plan for employees (SIMPLE) IRA.
Alicia has contributed $8,000 to a Roth IRA over the past four years. The account has
grown to $10,000 with investment earnings. She is facing a financial bind and needs to
withdraw $9,000. She will have to pay income tax and a 10% penalty on
$1,000.
$8,000.
$9,000. - CORRECT ANSWERS-$1,000.
Since the Roth contributions were made with after-tax dollars, Alicia can withdraw her
contributions first. She could withdraw the entire $8,000 that she has contributed without
any tax or penalty. Only $1,000 of her withdrawal will be subject to income tax or
penalty.
All of the following apply to voluntary early retirement programs except
they rarely result in lawsuits against the companies offering the programs.
they provide a set of incentives to reduce corporate headcount.
they present pluses and minuses for the eligible employee.
they should be analyzed based on their future value. - CORRECT ANSWERS-they
should be analyzed based on their future value.
Voluntary early retirement incentives provide a set of incentives to reduce corporate
headcount. They present pluses and minuses for the eligible employee that should be
evaluated based on their net present value. Such arrangements rarely result in lawsuits
because employees select themselves for termination.
All of the following are characteristics of a Qualified Longevity Annuity Contracts
(QLACs) except:
receipt of income payments is typically deferred until age 85.
the participant can elect either a fixed or variable annuity.
up to 25% of a qualified plan (or IRA) balance can be used to purchase a QLAC and be
exempted from RMD requirements.
they are a means of transferring longevity risk to an insurance company. - CORRECT
ANSWERS-the participant can elect either a fixed or variable annuity.
QLAC's must be fixed (not variable) annuities. The other statements are true regarding
QLAC's
