Question

In: Accounting

Which of the following is true about IRA rollovers? The taxpayer must complete the entire rollover...

Which of the following is true about IRA rollovers?

The taxpayer must complete the entire rollover process within 90 days or the distribution will be taxable.

The taxpayer may not make tax-free rollovers from more than one IRA during a one year period.

An indirect rollover is subject to 10% federal tax withholding, and the taxpayer must come up with this amount themselves or it will be taxable.

The taxpayer cannot claim an exception to the 10% penalty.

Solutions

Expert Solution

Correct Answer:

Second option - The taxpayer may not make tax-free rollovers from more than one IRA during a one year period (12 months)

Other answers are incorrect due to the reasons mentioned respectively.

First option - It is incorrect because the rollover process should be completed within 60 days (not 90 days) or the distribution will be taxable

Third option - It is incorrect because an indirect rollover is subjected to a 20% (not 10%) federal tax witholding, and the taxpayer must come up with this amount themselves or it will be taxable.

Forth option - It is incorrect because there are exceptional situations where exception to 10% penalty can be availed, that is, withdrawal of IRA can be made without any penalty. They include :

1. Withdrawals to pay back taxes to the IRS

2. Distributions to the participant’s estate after their death

3. Distributions to a participant who has become permanently disabled

4. Distributions for unreimbursed medical expenses that exceed a maximum of 10% of the participant’s adjusted gross income for that year

5. Distributions taken as part of a series of substantially equal periodic payments approved by the IRS


Related Solutions

which of the following is true. a Roth recharacterization of a converted tradition IRA is no...
which of the following is true. a Roth recharacterization of a converted tradition IRA is no longer permitted is not permitted before December 31, 2020 may be done any time before December 31, 2021 may be done at any time
Which of the following is true about fringe benefits? Which of the following is true about...
Which of the following is true about fringe benefits? Which of the following is true about fringe benefits? They represent additional compensation given for services performed They are only available for employees. The amount of the fringe benefit is never subject to income tax. They represent additional cash paid directly to employees.
Which of the following must be true if saving is equal to investment and there is...
Which of the following must be true if saving is equal to investment and there is a net financial inflow in the circular flow of an open economy? a. There must be a government budget deficit. b. Total leakages must exceed total injections. c. Government expenditures must exceed transfer payments d. Imports must exceed exports.
Which of the following statements about correlation are true?
4. Correlation basics Which of the following statements about correlation are true? Check all that apply Correlation is a numerical value between 1.1 and 2. The sign of the correlation indicates the strength or consistency of the linear relationship between two variables. A negative correlation means that two variables tend to change in opposite directions The correlation indicates the strength and the direction of the linear relationship between two variables If the correlation between two variables is 0, there is no clear linear relationship between the...
Which of the following statements about genetics is TRUE?
Which of the following statements about genetics is TRUE?  a. A mutation is any change in DNA that is harmful to an organism. b. Genetic disorders are always caused by the inheritance of recessive alleles. c. The red queen hypothesis proposes that asexual reproduction evolved in organisms to increase genetic variation, and therefore, improve resilience in ever-changing environments. d. Natural selection acts directly on the phenotype and indirectly on the genotype.
Which of the following statement is true? The entire marginal cost curve becomes the firms short-run...
Which of the following statement is true? The entire marginal cost curve becomes the firms short-run supply curve. Market demand is infinitely elastic in all competitive industries. The average variable cost curve represents the short run supply curve for competitive firms. -- Normal profits are a cost of production. (I chose this one. Is this right?) Competitive firms can earn no economic profits during the short run period of time.
Decide which of the following statements are True and which are False about equilibrium systems: True...
Decide which of the following statements are True and which are False about equilibrium systems: True False  For the following reaction: H2(g) + F2(g) ⇌ 2HF(g) the values of K and Kp are not the same. True False  A large value of K means the equilibrium position lies far to the left. True False  For a reaction with K >> 1, the rate of the forward reaction is greater than the rate of the reverse reaction at equilibrium. True False  For the following reaction:...
Which of the following statements about inventory valuation are incorrect ? A A taxpayer may write...
Which of the following statements about inventory valuation are incorrect ? A A taxpayer may write down inventory below market if he has offered for sale the same merchandise at below market value. B FIFO treats the inventory purchased first as the first inventory sold. C If the “dollar value” LIFO method is used it is optional to break up the inventory into “pools”. D LIFO treats the inventory purchased last as the first inventory sold
Which of the following is NOT true about licensing? a. Licensing is the practice in which...
Which of the following is NOT true about licensing? a. Licensing is the practice in which a company or individual provides the foreign partner with the technology to manufacture and sell products or services in a target country for an annual fee b. When a product is licensed, the foreign partner will use the licensor’s patented technology as agreed to manufacture and sell products that meet the licensor’s standards. c. The license fee could be based on a percentage of...
3. Which statement about methods in an interface is true? A.)All methods in an interface must...
3. Which statement about methods in an interface is true? A.)All methods in an interface must be explicitly declared as private or public. B.)All methods in an interface are automatically public. C.)All methods in an interface are automatically private. D.)All methods in an interface are automatically static.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT