TOOLS & TECHNIQUES OF EMPLOYEE BENEFIT AND RETIREMENT PLANNING
11th Edition
College Course Materials
Deanna L. Sharpe, Ph.D., CFP®, CRPC®, CRPS®
Associate Professor
CFP® Program Director
Personal Financial Planning Department
University of Missouri-Columbia
Please Note: Correct answers for each question are indicated in bold type. After each question,
the number of the page containing information relevant to answering the question is given. When a
calculation is necessary or the reasoning behind a given answer may be unclear, a brief rationale
for the correct answer is also given.
Part A: Retirement Planning
Estate and Retirement Planning
Chapter 9: Estate and Retirement Planning for Qualified Plans and IRAs
True/False
9.1
Qualified plans and IRAs may be subject to both estate tax and income tax
9.2
It is always better to roll over qualified plan assets to an IRA rather than keep the assets in
the plan.
9.3
A trust cannot be a designated beneficiary of an IRA.
Answer:
9.1
9.2
9.3
True [p. 90]
False [p. 90]
False [p. 96]
Multiple Choice
9.4
For purposes of required minimum distributions from an IRA or qualified plan, which of the
following cannot be a designated beneficiary?
a.
b.
c.
d.
a spouse
an individual unrelated to the participant
a charity
a trust
Answer: C [p. 95]
9.5
Advantages of rolling a qualified plan over to an IRA include
a.
b.
c.
d.
an IRA can invest in life insurance
may be more investment flexibility with an IRA
spousal consent is required for IRA distributions
the ability to take loans from the IRA
Answer: B [p. 90]
9.6
If a spouse is to be beneficiary of an IRA or a qualified plan, it is generally preferrable to
leave the IRA or qualified plan
a.
b.
c.
d.
to a bypass trust
to a QTIP trust
to the participant’s estate
outright to the spouse
Answer: D [p. 96-97]
Application
9.7
Ann has a Roth IRA. She died this year. Her son, Jim, is the designated beneficiary. Jim is
not required to start minimum distributions next year because Roth IRAs are not subject to
the required minimum distribution rules after death.
a. true
b. false
Answer: B [p. 93]
9.8
Bob died in 2009 at age 60. Bob named his spouse, Jessica (age 58), as beneficiary of his
qualified plan.
a. Jessica can roll over the qualified plan assets to a traditional IRA. If she does so,
minimum distributions from the IRA must begin in 2010.
b. If Jessica does not roll over the qualified plan assets to a traditional IRA, minimum
distributions from the IRA must begin in 2010.
c. Jessica can roll over the qualified plan assets to a traditional IRA. If she does so,
minimum distributions from the IRA must begin when Jessica attains age 70½.
d. If Jessica does not roll over the qualified plan assets to a traditional IRA, minimum
distributions from the IRA must begin when Jessica attains age 70½.
Answer: C [p. 93-94]
9.9
Tara designated a trust as beneficiary of her IRA. The following are beneficiaries of the
trust at Tara’s death: her spouse (age 70), her brother (age 72), her daughter (age 50), and
her son (age 48). The life expectancy of which trust beneficiary is used to determine
required minimum distributions?
a. the spouse
b. the brother
c. the daughter
d. the son
Answer: B [p. 96]
9.10
Jill is considering naming a bypass trust as beneficiary of her IRA after her death. Jill’s
spouse is a discretionary income beneficiary of the bypass trust. Which of the following is a
reason for not designating the bypass trust as beneficiary of her IRA?
a.
b.
c.
d.
IRA assets will appreciate as income taxable minimum distributions are made
Jill’s spouse can treat the IRA as his own
part of the unified credit will be wasted on income tax
a bypass trust is the best way to stretch income tax deferral over the life of Jill’s spouse
and his designated beneficiary
Answer: C [p. 97]