Question 1

Amy is single.During 2013,she determined her adjusted gross income was $12,000.During the year,Amy also contributed $1,500 to a Roth IRA.What is the maximum saver's credit she may claim for the year?
A)$750
B)$1,000
C)$1,500
D)$0

Accepted Answer

The saver's credit is a non-refundable tax credit available to eligible taxpayers who make contributions to retirement savings accounts. For 2013, the credit rate for a single filer with an AGI of $12,000 is 50%. The maximum contribution eligible for the credit is $2,000. Therefore, the maximum saver's credit Amy can claim is 50% of $1,500, which is $750.

Question 2

Kathy is 48 years of age and self-employed.During the year she reported $100,000 of revenues and $40,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k) ?
A)$11,152
B)$16,652
C)$28,652
D)$51,000

Accepted Answer

Kathy can contribute both an employee and employer contribution to her individual 401(k). The employee contribution limit is $22,500 (for 2023) plus a $7,500 catch-up contribution since she is over 50. The employer contribution is 20% of her net self-employment income, which is $60,000 ($100,000 - $40,000). Therefore, the maximum contribution is $22,500 + $7,500 + $12,000 = $42,000. However, the total contribution cannot exceed $66,000, so the maximum she can contribute is $28,652.

Question 3

Kathy is 48 years of age and self-employed.During the year she reported $400,000 of revenues and $100,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k) ?
A)$51,000
B)$56,500
C)$74,287
D)$79,787

Accepted Answer

Kathy is eligible to contribute the lesser of $56,500 or 100% of her net self-employment income, which is $400,000 - $100,000 = $300,000. Therefore, the maximum amount she can contribute to an individual 401(k) is $56,500.

Question 4

What is the maximum saver's credit available to any taxpayer in 2013?
A)$2,000
B)$1,000
C)$500
D)It depends on the filing status of the taxpayer

Accepted Answer

The answer of What is the maximum saver's credit available...

Question 5

Kathy is 60 years of age and self-employed.During the year she reported $400,000 of revenues and $100,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k) ?
A)$51,000
B)$56,500
C)$74,287
D)$79,787

Accepted Answer

The answer of Kathy is 60 years of age and...

Question 6

Which of the following taxpayers is most likely to qualify for the saver's credit?
A)A low AGI taxpayer who does not contribute to any qualified retirement plan.
B)A low AGI taxpayer who contributes to her employer's 401(k) plan.
C)A high AGI self-employed taxpayer.
D)A high AGI employee who does not contribute to any qualified retirement plan.To be eligible for the saver's credit a taxpayer must contribute to a qualified retirement plan (including IRAs) .Further,the credit is phased out completely for high AGI taxpayers.

Accepted Answer

To qualify for the saver's credit, a taxpayer must contribute to a qualified retirement plan. Therefore, option A is not likely to qualify as they do not contribute to any retirement plan. Option C is also not likely to qualify as they are a high AGI taxpayer and the credit is phased out completely for them. Option D is also not likely to qualify as they do not contribute to any qualified retirement plan. Option B is the most likely to qualify as they contribute to their employer's 401(k) plan and also have a low AGI.

Question 7

Yvette is a 44-year-old self-employed contractor (no employees) .During 2013,her Schedule C net income was 400,000.Assuming Yvette has no contributions to other retirement plans.What is the maximum amount that Yvette can contribute to (1) a SEP IRA and (2) an individual 401(k) ?

Accepted Answer

The answer of Yvette is a 44-year-old self-employed contractor (no...

Question 8

In 2013,Ryan contributes 10 percent of his $75,000 annual salary to a Roth 401(k) account sponsored by his employer,XYZ.XYZ offers a dollar-for-dollar match up to 10 percent of the employee's salary.The employer contributions are placed in a traditional 401(k) account on the employee's behalf.Ryan expects to earn an 8-percent before-tax rate of return on contributions to his Roth and traditional 401(k) accounts.Assuming Ryan leaves the funds in the accounts until he retires in 25 years,what are his after-tax accumulations in the Roth 401(k) and in the traditional 401(k) accounts if his marginal tax rate at retirement is 30 percent? If Ryan's marginal tax rate in 2013 is 35 percent will he earn a higher after tax rate of return from the Roth 401(k) or the traditional 401(k) ? Explain.

Accepted Answer

The answer of In 2013,Ryan contributes 10 percent of his...

Question 9

Carmello and Leslie (ages 34 and 35,respectively) are married and want to contribute to a Roth IRA.In 2013,their AGI totaled $42,000.Of the $42,000,Carmello earned $35,000 and Leslie earned $7,000.How much can each spouse contribute to a Roth IRA if they file jointly? How much can each spouse contribute to a Roth IRA if they file separately?

Accepted Answer

The answer of Carmello and Leslie (ages 34 and 35,respectively)...

Question 10

Kathy is 60 years of age and self-employed.During the year she reported $100,000 of revenues and $40,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k) ?
A)$28,652
B)$34,152
C)$51,000
D)$56,500

Accepted Answer

The answer of Kathy is 60 years of age and...

Question 11

On March 30,2013,Rodger (age 56) was let go from his employer of 30 years due to rough economic times.During his 30 years of employment,Rodger contributed $300,000 to his traditional 401(k) account.When Rodger was let go,his 401(k) account balance was $900,000 (this included both employer matching and account earnings) .Rodger immediately withdrew $40,000 to use as an emergency savings fund.What amount of tax and early distribution penalties must Rodger pay on the $40,000 withdrawal if his ordinary marginal tax rate is 28 percent?

Accepted Answer

The answer of On March 30,2013,Rodger (age 56) was let...

Question 12

Amy is single.During 2013,she determined her adjusted gross income was $12,000.During the year,Amy also contributed $2,500 to a Roth IRA.What is the maximum saver's credit she may claim for the year?
A)$1,250
B)$2,500
C)$1,000
D)$0

Accepted Answer

The saver's credit, also known as the retirement savings contribution credit, is a tax credit for low- to moderate-income individuals who contribute to a retirement plan. Amy's adjusted gross income of $12,000 falls within the income limits for the credit, but since she contributed to a Roth IRA, which is funded with after-tax dollars, she is not eligible for the credit. Therefore, the maximum saver's credit she may claim is $0.

Question 13

Sean (age 74 at end of 2012) retired five years ago.The balance in his 401(k) account on December 31,2012 was $1,700,000 and the balance in his account on December 31,2013 was $1,800,000.Using the IRS tables below,what is Sean's required minimum distribution for 2013?

Accepted Answer

The answer of Sean (age 74 at end of 2012)...

Question 14

Amy files as a head of household.She determined her 2013 adjusted gross income was $60,000.During the year,she contributed $2,500 to a Roth IRA.What is the maximum saver's credit she may claim for 2013?
A)$1,000
B)$2,000
C)$2,500
D)$1,250
E)$0

Accepted Answer

The saver's credit is not available to taxpayers with an adjusted gross income above certain limits. For 2013, the income limit for a head of household to qualify for the saver's credit was $44,875. Since Amy's income is $60,000, she is not eligible for the credit.

Question 15

Gordon is a 52-year-old self-employed contractor (no employees) .During 2013,his Schedule C net income was $88,000.What is the maximum amount that Gordon can contribute to (1) a SEP IRA and (2) an individual 401(k) ? (Round your answers to the nearest whole number)

Accepted Answer

The answer of Gordon is a 52-year-old self-employed contractor (no...

Quiz 13: Retirement Savings and Deferred Compensation

Amy is single.During 2013,she determined her adjusted gross income was $12,000.During the year,Amy also contributed $1,500 to a Roth IRA.What is the maximum saver's credit she may claim for the year?

Kathy is 48 years of age and self-employed.During the year she reported $100,000 of revenues and $40,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k) ?

Kathy is 48 years of age and self-employed.During the year she reported $400,000 of revenues and $100,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k) ?

What is the maximum saver's credit available to any taxpayer in 2013?

Kathy is 60 years of age and self-employed.During the year she reported $400,000 of revenues and $100,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k) ?

Which of the following taxpayers is most likely to qualify for the saver's credit?

Yvette is a 44-year-old self-employed contractor (no employees) .During 2013,her Schedule C net income was 400,000.Assuming Yvette has no contributions to other retirement plans.What is the maximum amount that Yvette can contribute to (1) a SEP IRA and (2) an individual 401(k) ?

Kathy is 60 years of age and self-employed.During the year she reported $100,000 of revenues and $40,000 of expenses relating to her self-employment activities.If Kathy has no other retirement accounts in her name,what is the maximum amount she can contribute to an individual 401(k) ?

Amy is single.During 2013,she determined her adjusted gross income was $12,000.During the year,Amy also contributed $2,500 to a Roth IRA.What is the maximum saver's credit she may claim for the year?

Sean (age 74 at end of 2012) retired five years ago.The balance in his 401(k) account on December 31,2012 was $1,700,000 and the balance in his account on December 31,2013 was $1,800,000.Using the IRS tables below,what is Sean's required minimum distribution for 2013?

Amy files as a head of household.She determined her 2013 adjusted gross income was $60,000.During the year,she contributed $2,500 to a Roth IRA.What is the maximum saver's credit she may claim for 2013?

Gordon is a 52-year-old self-employed contractor (no employees) .During 2013,his Schedule C net income was $88,000.What is the maximum amount that Gordon can contribute to (1) a SEP IRA and (2) an individual 401(k) ? (Round your answers to the nearest whole number)