Explain how distributions from a qualified pension plan, which are made in the form of annuity payments, are reported by an employee under the following circumstances: No employee contributions are made to the plan. The pension plan provides for matching employee contributions. a. Explain how distributions from a qualified pension plan, which are made in the form of annuity payments, are reported by an employee when no employee contributions are made to the plan. O A. The distributions are only taxable to the employee once the taxpayer is retired. OB. The distributions are only taxable to the employee once the taxpayer reached 65 of age. OC. The distributions are fully taxable to the employee when the payment is received. O D. The distributions are not taxable to the employee when the payment is received.

Explain how distributions from a qualified pension plan, which are made in the form of annuity payments, are reported by an employee under the following circumstances: No employee contributions are made to the plan. The pension plan provides for matching employee contributions. a. Explain how distributions from a qualified pension plan, which are made in the form of annuity payments, are reported by an employee when no employee contributions are made to the plan. O A. The distributions are only taxable to the employee once the taxpayer is retired. OB. The distributions are only taxable to the employee once the taxpayer reached 65 of age. OC. The distributions are fully taxable to the employee when the payment is received. O D. The distributions are not taxable to the employee when the payment is received.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following does not describe a defined contribution plan? The employer bears the risk of investment in a defined contribution plan. The contribution is certain but the benefit is uncertain. If the plan does poorly, the employee will share in the loss by paying more contributions. The accumulated fund on the date of an employee’s retirement determines the benefit.
Indicate by letter whether each of the events listed below increases (I), decreases (D), or has no effect (N) on an employer's projected benefit obligation. Events 1. Interest cost. 2. Amortization of prior service cost. 3. A decrease in the average life expectancy of employees. 4. An increase in the average life expectancy of employees. 5. A plan amendment that increases benefits is made retroactive to prior years. 6. An increase in the actuary's assumed discount rate. 7. Cash contributions to the pension fund by the employer. 8. Benefits are paid to retired employees. 9. Service cost. 10. Return on plan assets during the year are lower than expected. 11. Return on plan assets during the year are higher than expected.
In accounting for a defined-benefit pension plan __the expense recognized each period is equal to the cash contribution. ___the liability is determined based upon known variables that reflect future salary levels promised to employees. __the employer's responsibility is simply to make a contribution each year based on the formula established in the plan. __an appropriate funding pattern must be established to ensure that enough monies will be available at retirement to meet the benefits promised.
35. In a defined-benefit plan, a formula is used that defines the contribution the employer is to make; no promise is made concerning the ultimate benefits to be paid out to the employees. requires that the benefit of gain or the risk of loss from the assets contributed to the pension plan be borne by the employee. defines the benefits that the employee will receive at the time of retirement. requires that pension expense and the cash funding amount be the same.
Indicate by letter whether each of the events listed below increases (I), decreases (D), or has no effect (N) on an employer's periodic pension expense in the year the event occurs. Events 1. Interest cost. _____ 2. Amortization of prior service cost---AOCI. ______ 3.Excess of the expected return on plan assets over the actual return _____ 4. Expected return on plan assets. _____ 5. A plan amendment that increases benefits is made retroactive to prior years. ____ 6. Actuary's estimate of the PBO is increased.…
TaxpYer who make after-tax contributions to a qualified employer plan recover their investment cost when they begin to take periodic payments. How is their investment recovered?
Recording employee payroll deductions may involve: Multiple Choice Liabilities to the employer. Liabilities to federal and state governments. Expenses for state unemployment. Expenses for the gross wages and salaries. Expenses for the employer portion of any medical insurance.
A defined benefit plan is one in which: A.) The employer promises specified payments to employees on their retirement. B.)The specific provisions are defined by the Internal Revenue Code. C.) The specific provisions are defined by the Uniform Code of Retirement Plans. D.) The employee can specify the mix of benefits (e.g., health, pension, insurance) that will be received on retirement.
Annual additions to qualified retirement plans include interest and dividend income. forfeitures reallocated to plan participants. employee contributions. employer contributions.
If pension expense recognized in a period exceeds the current amount funded by the employer, what kind of account arises, and how should it be reported in the financial statements? If the reverse occurs'that is, current funding by the employer exceeds the amount recognized as pension expense'what kind of account arises, and how should it be reported?
Taxpayers who make after-tax contributions to a qualified employer plan recover their investment (cost) when they begin to take periodic payments. How is their investment recovered?
Which of the following statements is false regarding an employee's contribution into a 401(k) tax deferred retirement account? a.The employee's contributions are not subject to FICA tax. b.Upon retirement, payments are then subject to federal income tax. c.Upon retirement, the employee will receive their contributions back in the form of regular payments. d.The employee may be in a lower tax bracket when the retirement income is taxed. e.None of these statements are correct.