Chapter 13 Retirement Savings and Deferred Compensation

| November 9, 2018

102.

Katrina’s
executive compensation package allows her to participate in the company’s
nonqualified deferred compensation plan. In the current year, Katrina defers
15 percent of her $300,000 salary. Katrina’s deemed investment choice will
earn 8 percent annually on the deferred compensation until she takes a lump
sum distribution in 10 years. Katrina’s current marginal tax rate is 30
percent and she expects her marginal tax rate to be 28 percent upon receipt
on the deferred salary. What is her after-tax accumulation from the deferred
salary in 10 years?

103.

In 2014,
Tyson (age 22) earned $3,500 from his part-time job and he reported $15,000
of interest income (unearned income). Assuming he does not participate in an
employer-sponsored plan, what is the maximum deductible IRA contribution
Tyson can make in 2014?

104.

In 2014,
Tyson (age 52) earned $50,000 of salary. Assuming he does not participate in
an employer-sponsored plan, what is the maximum deductible IRA contribution
Tyson can make in 2014?

105.

In 2014,
Madison is a single taxpayer who is 25 years of age. During 2014, she
contributed $3,000 to her employer sponsored 401(k) account. Her 2014 AGI was
$64,500 (before considering IRA deductions). What is the maximum deductible
contribution, if any, that Madison can make her to IRA?

106.

Carmello and
Leslie (ages 34 and 35, respectively) are married and want to contribute to a
Roth IRA. In 2014, 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?

107.

Cassandra,
age 33, has made deductible contributions to her traditional IRA over the
years. When the balance in her IRA was $40,000, Cassandra received a
distribution of $34,000 from her IRA in order to purchase a new car. How much
of the $34,000 distribution will she have remaining after paying income taxes
and early distribution penalties on the distribution? Her marginal tax rate
is 25 percent.

108.

Ryan, age 48,
received an $8,000 distribution from his traditional IRA to pay for medical
expenses. Ryan has made only deductible contributions to the IRA and his
marginal tax rate is 28 percent. What amount of taxes and early distribution
penalties will Ryan be required to pay on the distribution?

109.

Tatia, age
38, has made deductible contributions to her traditional IRA over the past
few years. When her account balance was $32,000, she transferred the entire
$32,000 out of her traditional IRA and immediately into a Roth IRA. Her
current marginal tax rate is 25 percent. What amount of tax and penalty is
she required to pay on this rollover?

110.

Tatia, age
38, has made deductible contributions to her traditional IRA over the past
few years. When her account balance was $30,000, she received a distribution
of the entire $30,000 balance of her traditional IRA. She retained $5,000 of
the distribution to help her pay the taxes due on the distribution and she
immediately contributed the remaining $25,000 to a Roth IRA. What amount of
tax and early distribution penalty is she required to pay on the $30,000
distribution from the traditional IRA if her marginal tax rate is 25 percent?

111.

Gordon is a
52-year-old self-employed contractor (no employees). During 2014, 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).

112.

Yvette is a
44-year-old self-employed contractor (no employees). During 2014, 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)?

113.

Scott and his
wife Leanne (ages 39 and 37 respectively) earned $50,000 in 2014. Scott was
able to contribute $2,400 ($200/month) to his employer sponsored 401(k). What
amount of saver’s credit can Scott and Leanne claim in 2014?

114.

Deborah
(single, age 29) earned $25,000 in 2014. Deborah was able to contribute
$1,800 ($150/month) to her employer sponsored 401(k). What is the total saver’s
credit that Deborah can claim for 2014?

115.

Aiko (single,
age 29) earned $40,000 in 2014. He was able to contribute $1,800 ($150/month)
to his employer sponsored 401(k). What is the total saver’s credit that Aiko
can claim for 2014?

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