P2-U18 · PART 2 · SOURCE CYCLE 2026-2027
Business Retirement Plans
How to complete this unit
This unit uses 25 source-gated recall cards and 25 admissible practice questions. Complete the sequence in order; the unreleased wiki prose remains outside the learner path.
- 1 · LearnBuild the rule
Answer each recall prompt before opening it. Then learn the exact rule, test the controlling facts through four quick challenges, explore common questions, and finish with one own-words teach-back.
- 2 · ApplyUse it in context
Complete at least 20 mapped questions over two sessions. Review the explanation even when the answer is correct.
- 3 · ProveTest readiness
Use the Part 2 mock under time pressure. Return here for every flagged or missed concept before the next attempt.
Verified recall questions
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here. Stable unit ownership gathers this lesson across 1 textbook collection.
Q1.When are earnings on Alder Company retirement-plan contributions generally taxed?
Tax is generally deferred until distributions are received
Q2.Alder begins a new qualified defined-benefit plan. What federal tax benefit may be available?
A tax credit for beginning the plan
Q3.What is a general tax feature of Alder Company’s SEP, SIMPLE, or qualified plan?
It offers a tax-favored way to save for retirement
Q4.Alder, a sole proprietor, contributes to a qualifying small-business retirement plan for employees. Where is the contribution generally deducted?
Line 19 of Schedule C
Q5.What shared federal tax feature do SEP, SIMPLE, and qualified small-business plans offer?
A tax-favored way for the owner and employees to save for retirement
Q6.What can result when retirement funds are used in a prohibited transaction?
Excise taxes and other adverse tax consequences
Q7.For whom may an eligible small-business owner set up and maintain the retirement plans described in Publication 334?
For the owner and the owner’s employees
Q8.What core nondiscrimination requirement applies to contributions or benefits under a qualified retirement plan?
They must not discriminate in favor of highly compensated employees
Q9.Damian is 62 and works for Bethel's Realty, a small business with 12 employees. Bethel's Realty has a SIMPLE IRA plan for its employees. The business has chosen to make \(2\%\) nonelective contributions. Damian earned $20,000 in wages for the year, but he did not contribute to his own retirement plan during the year because he was low on funds. How much will Bethel's Realty contribute to Damian's retirement account?
$400
Q10.Corex Devices, Inc. maintains a SIMPLE IRA for its employees. The business elected to make 3% matching contributions for the year. An employee, Opal, quit her job on January 31, 2025, after the business had already deducted $75 from her wages based upon her election to contribute to its SIMPLE IRA plan. Opal had earned $2,000 of wages before she quit. How must Corex Devices treat this $75 deduction from Opal's wages?
Corex Devices must deposit Opal's contribution and match her contribution to her SIMPLE IRA account, up to 3% of her $2,000 compensation ($60).
Q11.Generally, at what age can an employee withdraw from their 401(k) without incurring an early withdrawal penalty?
59½
Q12.Lifeline Software, Inc. has decided to establish a SEP-IRA for its ten employees. All of the following statements about Lifeline's retirement plan are correct except:
A SEP allows for different contribution rates based on length of service for each employee.
Q13."Prohibited transactions" are transactions between a retirement plan and a disqualified person. Which of the following is exempt from the prohibited transaction rules?
A disqualified person who receives a benefit to which they are entitled as a plan participant.
Q14.Maura, age 26, began participating in her employer's SIMPLE IRA retirement account 18 months ago, when she got hired. She took an early distribution from the account on January 26, 2025, in order to buy a car. She does not qualify for any of the exceptions to the early withdrawal penalty. The distribution amount was $10,000. What is the penalty amount that Maura must pay on the early distribution?
$2,500
Q15.Can a SIMPLE IRA plan be maintained on a fiscal-year basis?
No, a calendar year must be used.
Q16.The Dumas Partnership has fifteen employees and three general partners. The business contributes $3,000 to each employee's retirement account during the year. Identical contributions are made into each individual partner's retirement account. How is this transaction reported?
Deduct employee retirement contributions on Form 1065 Report partner retirement contributions to each partner on Schedule K-1
Q17.Hajima is a sole proprietor who establishes a SEP-IRA for her small gift shop. The shop has two employees. After figuring her deductions for the year, Hajima has a (\$5,000) net loss operating in 2025 on her Schedule C. Which of the following statements is correct?
Because the business shows a loss, she is prohibited from contributing to her retirement account, but she can contribute to the retirement accounts of her employees.
Q18.All the following are requirements of ERISA (Employee Retirement Income Security Act) except:
ERISA requires large employers to set up retirement plans for their employees.
Q19.What types of employers cannot establish a SEP-IRA?
All of the above can set up a SEP-IRA.
Q20.What happens if an eligible employee entitled to a contribution is unwilling to set up a SIMPLE IRA?
Eligible employees may not opt-out of a SIMPLE IRA.
Q21.Which of the following statements regarding a SEP-IRA is correct?
Money can be withdrawn from a SEP-IRA by the employee at any time, but taxes may apply.
Q22.What are the initial penalties imposed on a disqualified person who takes part in a prohibited transaction with an IRA?
An initial tax of 15% of the amount involved, and an additional tax of 100% if the transaction is not corrected within the taxable period.
Q23.Malena works full-time for the city of Las Vegas as a parking enforcement officer. She participates in the city's pension plan. She also has her own part-time bookkeeping business which she works in the evenings and weekends. She reports her bookkeeping income on Schedule C. Can Malena set up a SEP-IRA for her self-employment income, even though she is already participating in her employer's plan?
Yes, Malena can still set up a SEP-IRA for her Schedule C business.
Q24.Portland Plumbing, Inc. is a C corporation that offers a qualified retirement plan to its 200 employees. The plan is required to file a Form 5500 annually. Portland Plumbing has a calendar-year plan. When is the company's Form 5500 due for the 2025 plan year?
July 31, 2026
Q25.Elektra works for Damascus Manufacturing, a small business with 75 employees. Damascus Manufacturing decides to establish a SIMPLE IRA plan and will make a \(2\%\) nonelective contribution for each of its employees. Elektra has a salary of $40,000 and made only $100 in contributions to her SIMPLE IRA for the year because she was short on funds. How much will Elektra's employer contribute to her SIMPLE IRA retirement account?
$800
Ready to move on?
- ▸ Explain at least 80% of these 25 rules without opening the answer, twice on different days.
- ▸ Score 80% across 20 or more mapped questions over two sessions, not one memorized round.
- ▸ Complete a timed Part 2 mock and return to this unit if its concepts remain flagged or missed.
Use these checks to choose your next study action. They do not predict a PSI scaled score.