Strategy Intermediate: Avoiding Taxes at Retirement

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1.
Earned income includes retirement and Social Security benefits.
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False. The income you get from working is called earned income. Retirement and Social Security benefits are unearned income.
2.
Which of the following is not true about a joint annuity?
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It pays any estate taxes on the taxable amount. It is recommended that an insurance policy be used in conjunction with the annuity to cover taxes.
3.
Distributions you receive from ordinary qualified retirement and IRA accounts are taxed at what rate upon withdrawal?
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Your regular income tax rate. Distributions are taxed at your regular income tax rate -- a fact that may call for some tax planning on your part.
4.
The tax penalty for early withdrawal from your IRA account is 10 percent.
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True. This penalty is meant to discourage you from taking out your money before the allowed time.
5.
To lower your minimum required retirement distribution, you can use only the joint life expectancy of you and your spouse.
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True. You can use only the joint life expectancy table for you and a spouse who is 10 or more years younger as beneficiary to lower your minimum required distribution.