Eva and Lisa Each Retired This Year and Started Receiving

question 14

Multiple Choice

Eva and Lisa each retired this year and started receiving distributions from their respective retirement plans.Eva's plan was funded with all pre-tax contributions,whereas Lisa's plan was funded with only after-tax contributions (Roth plan) .With respect to the tax treatment of their retirement plan distributions

• A)distributions from both retirement plans will be fully taxable.
• B)Eva's distributions will be fully taxable,and Lisa's distributions will not be taxable.
• C)Eva's distributions will not be taxable,but Lisa's distributions will be fully taxable.
• D)neither Eva's nor Lisa's distributions will be taxable.

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Definitions:

Cash Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits in the form of cash.

Declaration of Dividends

The formal announcement by a company's board of directors to distribute profits to shareholders, specifying the dividend amount and payment date.

Liquidating Dividend

A type of dividend paid by a company from its capital base, essentially returning part of the investors' original investment.

Paid-in Capital

Funds raised by a company through the issuance of shares to investors, representing the capital provided by shareholders through direct investments or share purchases.