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1.
Retirement plan balances left to a spouse are subject to a maximum 75 percent estate tax.
False. Retirement plan balances left to a spouse qualify for a tax-free transfer.
2.
Which of the following would most likely lower your taxes owed when you take retirement plan distributions?
Taking distributions in a year when you have a lot of tax deductions. Having deductions can lower your tax burden, so this may be a good time to take your distributions.
3.
If your income is below $32,000, your Social Security benefits will not be taxed.
False. It depends on your filing status. If your income is above $25,000 (single) and $32,000 (joint), your Social Security benefits can be taxed at 50 to 85 percent.
4.
The amount of your minimum required retirement distribution is based on your _______.
Life expectancy. The amount of your minimum distribution is based on your life expectancy as determined by IRS actuarial tables.
5.
During retirement, withdrawing too little from your retirement account will lead to a _______ tax penalty.
25 percent. There is a 25 percent tax penalty on the difference between the required minimum distribution and the amount you actually withdrew. It drops down to 10% if corrected in a timely manner.