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13

Taxation

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13. Which of the following statements concerning the tax advantages of qualified retirement plans is true? 

A. Amounts contributed to the plan in any given year from an employee-participant's earned income are not subjected to income taxation in the year of the contribution.

B. The plan's earnings are not taxed in the year they are earned.

C. When the employee-participant retires and withdraws his benefits, the benefits will be subjected to taxation in the year of withdrawal.

D. All of the above are true.

 

14. Which of the following statements regarding individual retirement accounts (IRAs) is true? 

A. Any individual without an employer-provided retirement account is entitled to make a contribution to a Roth IRA regardless of the amount of AGI.

B. Any individual without an employer-provided retirement account, and whose spouse is also not an active participant in an employer-provided retirement account, is entitled to make a deductible contribution to a traditional IRA.

C. Qualified withdrawals from a Roth IRA are subject to income tax in the year of withdrawal.

D. Qualified withdrawals from a traditional IRA are tax exempt.