Certified Plan Sponsor Professional (CPSP) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Certified Plan Sponsor Professional Exam. Use flashcards and multiple choice questions with full explanations. Achieve exam success!

Start Multiple Choice Practice Test
Start Flash Cards

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What must be done regarding rollover contributions from another plan or IRA?

  1. They must follow the same distribution restrictions as other contributions

  2. They must be accounted for separately in the plan

  3. They can be treated as regular contributions

  4. They can only be rolled over once in a lifetime

The correct answer is: They must be accounted for separately in the plan

Rollover contributions from another plan or IRA must be accounted for separately within the plan. This is significant because rollover contributions may come with different tax implications and distribution rules when compared to regular contributions. By maintaining a separate accounting for these contributions, the plan ensures compliance with tax regulations and allows for accurate tracking of the source of funds, which helps in determining the taxation and withdrawal options available to participants. This separate accounting is essential for providing participants with a clear understanding of how their funds can be accessed or utilized, particularly because rollover contributions can include pre-tax and post-tax amounts, each with distinct treatment concerning distributions.

More Questions Like This