NLHI Nevada Life and Health Insurance Exam - Set 5 - Part 3
Test your knowledge of technical writing concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.
Question 41: An employer sets up a retirement plan that gives the business a current tax deduction for contributions, defers tax on earnings, and must not discriminate in favor of highly paid employees. A plan meeting these federal standards is described as what?
Question 42: A saver compares two individual retirement accounts. In one, contributions may be deductible now but withdrawals in retirement are taxed; in the other, contributions are made with after-tax dollars but qualified withdrawals are tax-free. Which describes the Roth IRA?
Question 43: A worker receives a distribution check from a former employer's retirement account made payable to herself, intending to move the funds to an IRA. To avoid current tax, she must redeposit the money within a limited time. What is that rollover time limit?
Question 44: An adviser recommends moving retirement funds directly from one trustee to another so the money never passes through the account owner's hands, avoiding withholding and the sixty-day deadline. The method sidesteps the usual tax pitfalls entirely. What is this trustee-to-trustee movement called?
Question 45: An owner of a traditional IRA reaches the age at which the government requires withdrawals to begin so the deferred funds are eventually taxed. Failing to take the required amount triggers a steep penalty on the shortfall. These mandated withdrawals are called what?
Question 46: An employer explains its pension promises each retiring worker a specific monthly income based on salary and years of service, with the employer bearing the investment risk of funding that promise. Which type of retirement plan is this?
Question 47: A public school teacher and a hospital employee at a nonprofit both contribute to a tax-sheltered annuity through salary reduction. This retirement arrangement is available specifically to employees of certain public and tax-exempt organizations. This plan is known by which designation?
Question 48: A small business owner with a handful of employees wants a retirement plan where employees make salary-reduction contributions and the employer provides a matching contribution, designed for employers with no more than one hundred employees. Which plan fits this description?
Question 49: A person under age fifty-nine and a half withdraws money early from a traditional IRA for a nonqualifying reason. Besides owing ordinary income tax on the amount, the person faces an extra federal tax. What is the usual additional early-withdrawal penalty?
Question 50: An employee leaves a job after a few years and keeps all of her own salary-deferral contributions immediately, but her right to the employer's matching contributions depends on how long she stayed. This gradual earning of rights to employer money is called what?
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