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1.
Premature withdrawals and insufficient distributions from individual retirement accounts may be taxed.
True. You can be penalized for them.
2.
If the contributions you make to your IRA are taxed this year, they will be _______ when you withdraw them.
Non-taxable. They can be taxed only once.
3.
How old must you be in order to make an extra contribution to your IRA beyond the normal contribution limit?
50. The law lets you make an additional contribution if you are this age or older.
4.
How many times per year may an IRA be rolled over?
Once. This is the present limit.
5.
A collection of valuable, vintage, handmade Elvis memorabilia is allowed as an IRA investment.
False. Collectibles are not allowed as IRA investments.
6.
How much is the penalty on an excess contribution to an IRA?
6 percent. You will be charged 6 percent of the excess that you contribute.
7.
The amount of your IRA contributions that you can deduct from your taxable income begins to be phased out at a certain level of income.
True. Once you reach a certain level defined by the IRS, your deductibility begins to drop.
8.
If you are single and not covered by another employer retirement plan, the tax-deductibility of your IRA contributions is ________.
Fully allowable. There are no restrictions in this case.
9.
For married couples filing taxes jointly, as income rises above a certain phase-out point, the deductibility of IRA contributions ________.
Falls. The higher the adjusted gross income after a certain point, the more the deductibility drops.
10.
Mary is 76 years old and was required to withdraw $8,000 from her traditional IRA last year. She withdrew only $6,000 and did not attempt to correct her mistake. How much of a penalty will she be charged?
$500. The penalty (starting in 2023) is one-quarter of what one does not withdraw. Since Mary did not withdraw $2,000, she will be penalized $500.