AAMS Tax Planning & Wealth Transfer Flashcards

Required Minimum Distributions (RMDs) from traditional IRAs must generally begin at age:

Answer: 73

Under the SECURE 2.0 Act, the RMD starting age was raised to 73 for individuals who reach age 72 after December 31, 2022.

A Qualified Opportunity Zone (QOZ) investment provides a tax benefit by:

Answer: Deferring and potentially reducing capital gains taxes on reinvested gains

Investing realized capital gains into a Qualified Opportunity Fund defers and may reduce capital gains tax while eliminating tax on appreciation if held for at least 10 years.

Which charitable giving strategy allows a donor to make a large upfront contribution, receive an immediate deduction, and distribute funds to charities over time?

Answer: Donor-advised fund

A donor-advised fund allows a lump-sum charitable contribution with an immediate tax deduction, while the donor recommends grants to charities over multiple years.

The net investment income tax (NIIT) of 3.8% applies to taxpayers with modified adjusted gross income above certain thresholds on income including:

Answer: Capital gains, dividends, and interest

The 3.8% NIIT applies to the lesser of net investment income (dividends, interest, capital gains) or the amount by which MAGI exceeds the threshold.

An irrevocable life insurance trust (ILIT) is primarily used to:

Answer: Keep life insurance death benefits outside the taxable estate

An ILIT owns the life insurance policy, so death benefits are excluded from the grantor's taxable estate, reducing potential estate tax exposure.

The unified credit against the federal estate and gift tax effectively exempts estates valued below approximately how much in 2024?

Answer: $13.61 million

The federal estate and gift tax exemption for 2024 is $13.61 million per individual, sheltering estates below that threshold from federal estate tax.