Final Exam Study 1

Stock options are a high out-of-pocket expense for companies with high stock prices.

• True

• False

Which IRC section governs qualified retirement plans?

• 401

• 402

• 501

• 502

A bonus is used for all the following reasons except:

• Incentivizing executives

• Funding buy-sell agreements

• All of the above

• A and B only

When does an employer get a deduction for restricted stock?

• When it becomes substantially vested

• 2 years post-83(b)

• When employee purchases stock

• When employee sells stock

Advantages of cash compensation include:

• (I) only

• (I) and (II) only

• (II) and (III) only

• (III) and (IV) only

It’s always better to roll over qualified plan assets to an IRA.

• True

• False

Why include capital needs at death in retirement planning?

• Insurance not available at older ages

• Funding is cheaper when started younger

• These concerns rarely arise

• Insurance solves everything

Roth IRA beneficiaries don’t need to take RMDs.

• True

• False

If a trust is an IRA beneficiary, whose life expectancy is used?

• Spouse

• Brother

• Daughter

• Son

Majority S corp shareholders who are employees should:

• Distinguish comp and earnings

• Declare all as comp

• Declare all as earnings

• Use safe harbor