Quiz 11: Retirement and Other Tax-Deferred Plans and Annuities

Retirement accounts include traditional IRAs,Roth IRAs,Keoghs,and Coverdell Education Savings Accounts.

An annuity is a series of payments made pursuant to a contract.

All tax-deferred pension plans have an accumulation period and a distribution period.

If a retirement plan is funded with dollars that have not been taxed,the distributions will not be taxed.

Contributions to a qualified pension plan can be deducted immediately by an employer.

Under a qualified profit-sharing plan,contributions must be made at least annually whether or not the employer has positive net income for the year.

Defined-benefit plans provide for a stream of definitely determinable benefits.

In order to obtain and retain qualified status,a pension or profit-sharing plan must not discriminate in favor of highly compensated employees.

Employers with 200 or fewer employees who do not have a qualified pension or profit-sharing plan can establish a SIMPLE retirement plan for their employees.

SIMPLE plans are not subject to the nondiscrimination rules for other qualified plans.

There are two types of IRAs: a traditional IRA and a Roth IRA.

If an individual (or spouse)is an active participant in an employer-sponsored retirement plan,he or she cannot make a deductible IRA contribution.

If only one spouse is employed,and that spouse is not covered under an employer-sponsored retirement plan,then the non-working spouse can make a deductible contribution to his or her own IRA.

With a Roth IRA,contributions are deductible,the account grows tax-free,and distributions are not taxable.

A participant has an adjusted basis of zero in any nondeductible contributions to a traditional IRA.

Contributions to a Coverdell Education Savings Account can only be made by the parents or grandparents of a child under the age of 18.

Annually,up to $2,000 per beneficiary can be contributed to a Coverdell Education Savings Account.

Contributions to a Coverdell Education Savings Account are not subject to AGI phaseout rules.

Distributions from a qualified pension plan may be fully taxable,nontaxable,or a combination of both.

If a taxpayer funded some contributions to a qualified pension plan with previously-taxed dollars,then some of the distributions from that plan during retirement will be nontaxable.

Roth IRA withdrawals are deemed to first come from contributions followed by earnings.

Distributions from a Coverdell Education Savings Account are tax-free to the beneficiary if they are used for his or her qualified education expenses.

If a taxpayer pays for an annuity contract with after-tax dollars,all payments received under the contract will be tax-free until the original cost is recovered.

To calculate the taxable amount of an annuity payment,the taxpayer must determine the expected return under the contract.

For all annuity contracts,to determine the expected return,use the IRS tables for either a single life or a dual life annuity.

Tax-deferred plans are only available for purposes of saving for retirement.

Defined-contribution plans establish the amount of retirement benefits an employee will receive in retirement.

SIMPLE and SEP plans are subject to the same nondiscrimination rules that apply to other retirement plans.

Individuals age 50 or older can make greater annual contributions to an IRA.

Individuals who are active participants in an employer-sponsored retirement plan may make a deductible contribution to a traditional IRA in certain circumstances.

Individuals who make contributions to a Coverdell Education Savings Account must have AGI of $175,000 or less.

A stream of payments can be called an annuity.

The proportion of an annuity payment from a qualified pension plan that is determined to have come from employee contributions is taxed at ordinary income rates.

Pension plan distributions are reported to taxpayers on a Form 1099-P.

The expected return on an annuity contract that will last for a specified amount of time is determined with reference to the life expectancy tables published by the IRS.

A distribution from a retirement plan is conceptually similar to a withdrawal from a savings account.

Annual contributions to a Keogh plan cannot exceed the greater of $52,000 or 100% of compensation.

For taxpayers under age 50,contributions can be made to a Roth IRA in an amount equal to the lower of $5,500 or 100% of compensation,plus the amount of contributions for the year to other IRAs.

Distributions from a Coverdell Education Savings Account are tax-free to the beneficiary if they are used for his or her qualified education expenses.

Generally,tax-deferred retirement plans are not required to make distributions to beneficiaries.

Which of the following statements is incorrect? A) An annuity is a series of payments pursuant to a contract. B) A payment to a beneficiary from a pension plan is called a distribution. C) Contributions to a pension plan can only be made by the beneficiary. D) With a qualified pension plan,earnings on plan assets are not taxed in the year earned.

Which of the following statements is incorrect? A) Individual-based retirement plans include a Roth IRA. B) Distributions from a pension plan may be made in a lump sum or may be spread out in payments over many years. C) Tax-deferred plans can be created for purposes other than retirement. D) If a pension plan is funded with contributions that have not been taxed,the distributions will not be taxed.

Which of the following statements is correct? A) In part,Congress established pension plan rules to encourage individuals to save for retirement. B) Retirement plans are generally not tax-free,only tax-deferred. C) Individuals or companies usually establish a pension plan with a trustee. D) All of the statements are correct.

What are some tax consequences related to a qualified pension plan? A) Employer contributions are deductible when made. B) Earnings on the contributions are taxable to the employee as they are earned. C) Employees are not taxed until distributions are received from the plan. D) Only Employer contributions are deductible when made and Employees are not taxed until distributions are received from the plan.

In order to obtain and retain qualified status,a pension or profit-sharing plan must not discriminate in favor of highly compensated employees which include: A) Employees who own more than 5% of the corporation's stock. B) Employees who received over $85,000 compensation in the previous year. C) Employees who were in the top 25% of employees based on compensation. D) None of these.

Which of the following statements is incorrect? A) Qualified pension plans may be contributory or noncontributory. B) An employer can require employees to make contributions as long as the plan is non-discriminatory. C) A profit-sharing plan does not qualify as a pension plan because the amount of profit in a year cannot be known in advance. D) With a defined-contribution plan,the amount of total retirement benefits is unknown.

Pension plans must meet complex rules to retain their tax-advantaged status.These rules include all of the following except: A) The plan must not discriminate in favor of highly compensated employees. B) Employee and employer contributions must fully vest within five years. C) The plan must adequately cover rank-and-file employees. D) The plan must be established for the exclusive benefit of employees and their beneficiaries.

In 2014,a 52-year-old participant in a 401(k)plan may contribute a maximum of: A) $6,500. B) $14,500. C) $17,500. D) $23,000.

Xavier is a self-employed plumber.His earnings from self-employment,before the Keogh deduction but after deducting half of the self-employment tax,are $80,000.What is his deductible Keogh contribution for 2014? A) $16,000. B) $20,000. C) $52,000. D) $64,000.

Which of the following is true regarding an SEP? A) Cannot discriminate in favor of highly compensated employees. B) Deductible contributions cannot exceed the lower of 15% of the employee's compensation or $52,000. C) Self-employed individuals cannot create and contribute to an SEP. D) The plan must cover all employees who have reached the age of 18,who have worked for the employer for at least two of the preceding five years,and who received at least $550 in compensation.

Kaysia participates in a SIMPLE plan provided by her employer.In 2014,she contributes 6% of her $40,000 salary,and her employer contributes 3% to the plan.What amount of the contributions will be vested in her account at the end of 2014? A) $0. B) $1,200. C) $2,400. D) $3,600.

Venkat is age 32,single,and reported AGI of $66,000 in tax year 2014.He is an active participant in his employer's pension plan.What is the maximum deductible IRA contribution he can make in 2014? A) $0. B) $2,200. C) $3,300. D) $5,500.

Charlotte is age 52,married,and reported AGI of $100,000 in tax year 2014.She is an active participant in her employer's pension plan.What is the disallowed portion of her deductible IRA contribution in 2014? A) $1,000. B) $1,100. C) $1,300. D) $5,200.

Escobar and Rose are both age 36 and file a joint return.Neither is covered under an employer plan.Escobar earned $121,000 of compensation in 2014.Rose worked part-time and earned $1,200.What is the maximum deductible IRA contribution they can make in 2014? A) $0. B) $5,500. C) $6,700. D) $11,000.

Jill is single,age 27,and reported AGI of $62,000 in tax year 2014.She is an active participant in her employer's pension plan.What is the maximum deductible Roth IRA contribution she can make in 2014? A) $0. B) $1,100. C) $4,400. D) $5,500.

Omar is single,age 46,and reported AGI of $124,000 in tax year 2014.He is an active participant in his employer's pension plan.What is the maximum Roth IRA contribution he can make in 2014? A) $0. B) $1,833. C) $3,667. D) $5,500.

Valerie and Marty are both age 51 and file a joint return.They have one child who is age 17.They have combined AGI in 2014 of $180,000.What is their maximum permitted contribution to a Coverdell Education Savings Account for 2014 assuming no other persons make contributions? A) $0. B) $2,000. C) $5,500. D) $6,500.

Benjamin and Ester file a joint return and have AGI of $165,000.Both are active participants in their employer's pension plan.They have one child,Emily,who is age 8.Emily's grandparents contributed $1,000 to a Coverdell Education Savings Account for Emily in 2014.What is the maximum permitted Coverdell Education Savings Account contribution that Benjamin and Ester can make in 2014? A) $0. B) $1,000. C) $2,000. D) $5,500.

Which of the following statements regarding a Coverdell Education Savings Account (CESA)is incorrect? A) In order to be tax-free,distributions must be used exclusively to pay the qualified education expenses of the beneficiary. B) Any person can contribute to a CESA,even if he or she is not related to the beneficiary. C) A person can contribute to only one CESA during each tax year. D) Contributions to a CESA are not tax-deductible.

Len is entitled to receive monthly payments of $1,500 over his life from his employer's qualified pension plan.The payments begin January 1,2014.He contributed $71,500 to the plan prior to his retirement at age 62.Using the simplified method,how much of the payments will be included in Len's taxable income for 2014? A) $0. B) $3,300. C) $14,700. D) $18,000.

Patrick is entitled to receive monthly payments of $1,500 over his life from his employer's qualified pension plan or he can take $1,300 monthly over his life and the life of his wife.The payments begin January 1,2014.He contributed $85,250 to the plan prior to his retirement.Patrick is 64 and his wife is 62.Using the simplified method,how much of the payments will be included in Patrick's taxable income for 2014 if he chooses to take $1,300 monthly over his life and the life of his wife? A) $1,300. B) $3,300. C) $12,300. D) $15,600.

Zena must start making distributions from her traditional IRA beginning April 1,2014.At the end of 2013,the plan had a balance of $220,000 and Zena was 71 years old.What minimum amount must Zena take as a distribution from the IRA beginning April 1,2014? A) $8,302. B) $8,594. C) $13,497. D) $14,379.

If the proceeds of a pension plan are being distributed and the original beneficiary dies: A) The person who inherits the plan assets can elect to be treated as the original beneficiary if that person is the spouse of the original beneficiary. B) The person who inherits the plan assets can elect to be treated as the original beneficiary if that person is unrelated to the original beneficiary. C) The person who inherits the plan assets will receive the remaining plan assets tax-free. D) The balance of the pension plan assets must be distributed in the year of death.

Max retired in 2014 at age 62.During the year he received distributions of $9,000 from his IRA.He made nondeductible contributions of $20,000 to the IRA in prior years and has never received a nontaxable distribution.As of December 31,2014,the value of his IRA was $150,000.Calculate the taxable portion of Max's distribution. A) $0. B) $1,132. C) $7,868. D) $9,000.

Distributions from a traditional IRA: A) Are fully taxable if the IRA was entirely funded with deductible contributions. B) Are always fully taxable. C) Are always nontaxable. D) Are fully taxable if the IRA was entirely funded with nondeductible contributions.

Regarding withdrawals from a Roth IRA: A) There are minimum withdrawal requirements for a Roth IRA. B) Roth IRA withdrawals are taxable if made after the five-tax-year period beginning with the first tax year in which a Roth contribution was made. C) Roth withdrawals are deemed to first come from contributions followed by earnings. D) Withdrawals that fail to meet the five-year holding period requirement are not taxable to the extent they do not exceed earnings.

Regarding a Coverdell Education Savings Account: A) Distributions are tax-free to the beneficiary if they are used for his or her qualified education expenses. B) Qualified education expenses include required tuition,fees,books,supplies,and equipment at an eligible educational institution. C) Qualified expenses must be reduced by scholarships or other tax-free income. D) All of these.

Regarding a full or partial rollover of assets from one retirement plan to another retirement plan: A) Rollovers are normally taxable to the beneficiary. B) Rollovers are permitted only in unusual circumstances. C) A tax-free rollover can be made from a traditional IRA to another traditional IRA. D) A tax-free rollover can be made from a traditional IRA to a Roth IRA.

Damian is age 77.He purchased a single life annuity contract that will pay him $6,000 per month for life.The expected return on the contract is: A) $67,200. B) $806,400. C) $871,200. D) $1,526,400.

Kasey is 72 years old.She purchased a single life annuity contract that will pay her $10,000 per year for 15 years.The expected return under the contract is: A) $10,000. B) $150,000. C) $219,000. D) $384,000.

Shauntae is 75 years old.He purchased a single life annuity contract that will pay him $3,000 per month for 10 years.The expected return under the contract is: A) $30,000. B) $360,000. C) $450,000. D) $482,400.

Habiba is age 74 and married.Her husband is age 73.She purchased a single life annuity contract that will pay her $20,000 per year for life.The expected return on the contract is A) $264,000. B) $278,000. C) $282,000. D) $476,000.

Damian is age 77.He paid $600,000 for a single life annuity contract that will pay him $72,000 per year for life.The tax-free amount of the first $72,000 payment is A) $18,429. B) $28,302. C) $49,587. D) $53,571.

Godfrey is age 77.He paid $240,000 for a single life annuity contract that will pay him $28,800 per year for life.The taxable amount of the first $28,800 payment is A) $7,371. B) $8,965. C) $17,479. D) $21,429.

At the end of 2012,Erin was 74 years old and her traditional IRA had a balance of $300,000.She properly withdrew $12,605 from her IRA in 2013,the first year she took a withdrawal.In 2013,her IRA assets earned $37,500.What amount must Erin take as a distribution from her IRA in 2014? A) $14,768. B) $14,187. C) $13,651. D) Some other amount.

Which of the following is not an employer-sponsored retirement plan? A) Roth IRA. B) SIMPLE. C) 401(k). D) Qualified pension plan.

Which of the following statements is incorrect? A) Tax-deferred plans have an accumulation period and a distribution period. B) Normally,if a retirement plan is funded with dollars that have already been taxed,the distributions will be taxed. C) During the accumulation period of a qualified retirement plan,no taxes are due on the earnings from the plan investments. D) Contributions to retirement plans are often limited in amount.

What are the tax consequence(s)related to a qualified pension plan? A) Employer contributions are deductible when made. B) Earnings on the contributions are taxable as they are earned. C) Employees are not taxed until distributions are received from the plan. D) Only Employer contributions are deductible when made and Employees are not taxed until distributions are received from the plan.

In 2014,the maximum annual contribution to a SIMPLE pension plan for an employee under the age of 50 is: A) $5,000 B) $12,000 C) $17,500 D) $52,000

For 2014,the maximum annual contribution to a Simplified Employee Pension (SEP)plan for an employee under the age of 50 is: A) $5,000 B) $12,000 C) $17,500 D) $52,000

Employees age 50 or over can contribute an additional ________ per year to a 401(k)plan. A) $17,500 B) $6,500 C) $5,500 D) $5,000

Paulette is age 32,single,and reported AGI of $66,000 in tax year 2014.She is an active participant in her employer's pension plan.What amount of deductible IRA contribution is disallowed in 2014? A) $0. B) $2,200. C) $3,300. D) $5,500.

Which of the following statements regarding Individual Retirement Accounts (IRA)is incorrect? A) Contributions to a conventional IRA may be tax-deductible while contributions to a Roth IRA are never tax-deductible. B) Excess contributions to an IRA are subject to an excise tax. C) Because IRA contributions are based on compensation,a non-working spouse cannot make a contribution to an IRA. D) Once a taxpayer reaches age 70½,deductible contributions cannot be made to a conventional IRA.

Gwen is age 51,married,and reported AGI of $99,000 in tax year 2014.She is an active participant in her employer's pension plan.What amount of deductible IRA contribution is disallowed in 2014? A) $825. B) $975. C) $4,175. D) $5,525.

DJ is age 27,single,and reported AGI of $68,000 in tax year 2014.He is an active participant in his employer's pension plan.What is the maximum deductible IRA contribution he can make in 2014? A) $0. B) $1,100. C) $4,400. D) $5,500.

Patrick is age 30,single,and has AGI of $101,000.He would like to contribute to a Coverdell Education Savings Account (CESA)for his niece,Eileen.What is the maximum CESA contribution Patrick can make for Eileen in 2014? A) $0. B) $1,200. C) $1,500. D) $2,000.

Chandelle and Treymane are married and have combined AGI of $215,000.They would like to contribute to a Coverdell Education Savings Account for their grandson.What is the maximum contribution they can make in 2014? A) $2,000. B) $1,667. C) $333. D) $0.

Which of the following statements regarding a Coverdell Education Savings Account (CESA)is correct? A) An individual can be the beneficiary of multiple CESAs. B) Annual contributions are limited to $2,000 per beneficiary,per contributor. C) A contributor cannot make a contribution for himself/herself. D) For single taxpayers,permitted contributions begin to be phased out when AGI reaches $90,000.

Which of the following statements is incorrect? A) Roth IRA distributions are never taxable. B) Taxpayers can rollover plan assets from one plan to another tax-free if certain rules are followed. C) If distributions from a Coverdell Education Savings Account are used for qualified education expenses,the distributions are tax-free. D) For traditional IRA distributions,the date on which minimum payments must begin is April 1 of the calendar year following the year in which the taxpayer reaches age 70½.

Distributions from a retirement plan are not subject to a 10% additional tax in each of the following instances except when: A) The distribution is made to pay an IRS tax levy on the plan. B) The distribution is paid to an employee to be used to pay health insurance premiums. C) The distribution is used to pay for medical expenses above the 10% AGI threshold. D) The distribution is made to an employee or retiree on or after age 59½.

Mark is single and must start making distributions from his traditional IRA beginning April 1,2014.At the end of 2013 when Mark was 71 years old,the IRA had a balance of $110,000.What amount must Mark take as a distribution from the IRA by April 1,2014? A) $4,151. B) $4,297. C) $6,748. D) $7,190.

At the end of 2012,Erin was 73 years old and her traditional IRA had a balance of $200,000.She properly withdrew $8,403 from her IRA in 2013.In 2013,her IRA assets earned $25,000.What amount must Erin take as a distribution from her IRA in 2014? A) $8,733. B) $9,458. C) $9,825. D) Some other amount.

Which of the following statements is incorrect? A) An annuity is a series of payments under a contract. B) Annuity payments are fixed in amount. C) Annuity payments may be for a specified period of time or for the life of the contract holder. D) The proportional amount of an annuity payment that is attributable to the cost of the contract is tax-free.

Which of the following statements is incorrect? A) The exclusion ratio represents the proportion of each annuity payment that will be tax-free. B) If annuity payments are to be received for a fixed period,the taxpayer does not need to refer to the life expectancy tables provided by the IRS. C) To determine the taxable amount of each annuity payment,the taxpayer must know the cost of the contract. D) Once the cost of the annuity has been recovered,any remaining payments will be tax-free.

To calculate the taxable portion of an annuity payment,a taxpayer must determine all of the following except: A) The cost of the annuity contract. B) The year in which annuity payments were first received. C) The expected return from the contract. D) The amount and frequency of occurrence of the stream of annuity payments.

Which of the following statements is incorrect? A) A SIMPLE plan is an employer-sponsored retirement plan. B) A payment to a beneficiary from a pension plan is called a distribution. C) Tax-deferred plans can be created for purposes other than retirement. D) Retirement plans are always funded with contributions that have not been taxed,so the withdrawals are taxed.

All of the following are employer-sponsored plans except: A) Coverdell Education Savings Account. B) Qualified profit-sharing plan. C) Keogh plan. D) 403(b).

Puri is a self-employed Spanish teacher.Her earnings from self-employment before the Keogh deduction but after deducting half of the self-employment tax are $120,000.What is her deductible Keogh contribution for 2014? A) $96,000. B) $52,000. C) $30,000. D) $24,000.

In 2014,a 48-year-old participant in a 401(k)plan may contribute a maximum of: A) $5,500. B) $12,000. C) $17,500. D) $23,000.

Maurice is age 44,single,and reported AGI of $68,000 in tax year 2014.He is an active participant in his employer's pension plan.What is the maximum deductible IRA contribution he can make in 2014? A) $0. B) $1,100. C) $4,400. D) $5,500.

Harriett is age 52,married,and reported AGI of $100,000 in tax year 2014.She is an active participant in her employer's pension plan.What is the maximum deductible IRA contribution she can make for her own account in 2014? A) $4,400. B) $5,200. C) $6,500. D) Some other number.

Augustus is single and age 51.He had AGI of $39,000 in tax year 2014 and is an active participant in his employer's pension plan.What is the maximum deductible IRA contribution he can make in 2014? A) $2,700. B) $3,800. C) $5,500. D) $6,500.

Which of the following statements regarding a Coverdell Education Savings Account (CESA)is correct? A) Distributions used to pay qualified higher education expenses of the beneficiary are tax-free. B) A person can contribute to a CESA only if the beneficiary is related by blood or marriage. C) Taxpayers who file a joint tax return can contribute to a CESA only if their AGI is less than $150,000. D) Contributions to a CESA are tax deductible and the distributions are tax-free (if used for their intended purpose).

Hyman is age 34,single,and has AGI of $130,000.He would like to contribute to a Coverdell Education Savings Account (CESA)for his niece,Danielle.Danielle's father has already contributed $500 to a CESA in 2014.What is the maximum CESA contribution Hyman can make for Danielle in 2014? A) $0. B) $500. C) $1,500. D) $2,000.

Hamden is entitled to receive monthly payments of $6,000 over his life from his employer's qualified pension plan.The payments begin January 1,2014.He contributed $286,000 to the plan prior to his retirement at age 62.Using the simplified method,what amount of the payments will be excluded from Hamden's taxable income for 2014? A) $0. B) $13,200. C) $58,800. D) $72,000.

Max retired in 2014 at age 62.During the year he received distributions of $12,000 from his IRA.He made nondeductible contributions of $30,000 to the IRA in prior years and has never received a nontaxable distribution.As of December 31,2014,the value of his IRA was $250,000.Calculate the nontaxable portion of Max's distribution. A) $1,374. B) $1,440. C) $10,560. D) $10,626.

Pierre retired in 2014 at age 62.During the year he received distributions of $27,000 from his IRA.He made nondeductible contributions of $60,000 to the IRA in prior years and has never received a nontaxable distribution.As of December 31,2014,the value of his IRA was $450,000.Calculate the taxable portion of Pierre's distribution. A) $3,396. B) $3,600. C) $23,400. D) $23,604.

Damian is age 79.He purchased a single life annuity contract that will pay him $4,000 per month for life.The expected return on the contract is: A) $40,000. B) $480,000. C) $518,400. D) $936,000.

Felix is age 74 and his wife is age 73.He purchased a single life annuity contract that will pay him $80,000 per year for life.The expected return on the contract is A) $1,904,000. B) $1,128,000. C) $1,112,000. D) $1,056,000.

Paolo is age 77.He paid $240,000 for a single life annuity contract that will pay him $43,200 per year for life.The tax-free amount of the first $43,200 payment is A) $11,321. B) $19,835. C) $21,771. D) $21,429.

What is an annuity contract? Who are the parties to an annuity contract?

What is a good rule of thumb you should use when thinking about the taxability of retirement plan distributions?

Retirement plans can be categorized into employer-sponsored plans and individual-based plans.What is the distinction? Give examples of plans in both categories.

What are some of the significant tax benefits for both employees and employers associated with a qualified pension plan?

In the case of defined-contribution plans,in 2014 what are the maximum contribution limits by an employee under the age of 50 to a qualified pension plan,a 401(k)plan,a Keogh plan,SEP,and SIMPLE plan?

A pension or profit-sharing plan must not discriminate in favor of highly compensated employees.What employees meet the definition of "highly compensated" for purposes of these plans?

Exam Company provides a SIMPLE plan for its employees.Under the plan,employees can contribute up to 6% of their salary and Exam Corporation will match the employee's contribution up to 3% of the employee's salary.Ben,age 44,is an employee of Exam Corporation and elects to contribute the maximum amount of his $95,000 salary to the SIMPLE plan.What is the total contribution made to Ben's SIMPLE account? When does Ben's contribution vest? When does the contribution by Exam Company vest? What is the amount contributed to Ben's account if Ben's salary is $210,000?

What is the maximum deductible contribution that can be made to one or more deductible IRAs in each of the following instances? a.A single person,age 41,who is not an active participant in an employer-sponsored retirement plan with AGI of $97,000. b.A married couple,ages 33 and 34,neither of whom is an active participant in an employer-sponsored retirement plan.One spouse has W-2 income of $57,000 and the other spouse did not work. c.A married couple,ages 44 and 48.One spouse is covered under an employer-sponsored retirement plan and the other is not.The covered spouse has W-2 income of $125,000 and the non-covered spouse has W-2 income of $32,000.

What is the maximum deductible contribution that can be made to one or more deductible IRAs in each of the following instances? a.A single person,age 51,who is an active participant in an employer-sponsored retirement plan with AGI of $37,000. b.A single person,age 59,who is an active participant in an employer-sponsored retirement plan with AGI of $66,000. c.A single person,age 26,who is an active participant in an employer-sponsored retirement plan with AGI of $62,000.

Quentin and Janelle would like to establish a Coverdell Education Savings Account (CESA)for their daughter,age 5,and their nephew (the son of Quentin's brother),age 8.Their AGI is $145,000.Quentin's brother has already contributed $1,500 to a CESA for his son. a.What is the maximum amount Quentin and Janelle can contribute to a CESA for their daughter and their nephew? b.If their AGI were $208,000,what is the maximum amount they can contribute to a CESA for their daughter and their nephew?

Randy is entitled to receive monthly payments of $2,500 over his life from his employer's qualified pension plan or he can take $2,300 over his life and the life of his wife.The payments begin May 1,2014.Randy contributed $106,000 to the plan prior to his retirement.Randy is 67 and his wife is 65.Using the simplified method,how much of the payments will be included in Randy's income for 2014 in each of the following independent situations? a.Randy chooses to take payments of $2,500 over his life. b.Randy chooses to take payments of $2,300 over his life and the life of his wife.

Heather,age 67,retired in 2014.During the year she received distributions of $14,000 from her IRA.She made nondeductible contributions of $40,000 to the IRA in prior years and has never received a nontaxable distribution.As of December 31,2014,the value of her IRA was $250,000.Calculate the taxable portion of Heather's distribution and her tax basis in the IRA after the distribution that she will carry forward to 2015.

Keisha established a Roth IRA in 2004.She contributes the maximum amount each year,for the next 20 years and retires when she is 65.At the time of her retirement,the account has a balance of $248,000,which is made up of $100,000 in contributions and the balance in earnings.What amount can Keisha withdraw tax-free from the Roth IRA each year during her retirement?

Under what circumstances might an individual want to establish an annuity contract in retirement?

Carl is 60 years old.On January 1,2014,Carl purchased a single life annuity for $70,000.The annuity contract provides Carl with payments of $600 per month for the rest of his life.Payments under the contract began January 1,2014.How much of the annuity payments are included in income for 2014? (round the exclusion ratio to four decimal places)