Practice Test Geeks(AFIP) Certified Association of Finance & Insurance Professionals Practice Test
← All AFIP Flashcard Decks

AFIP Tax Planning and Retirement Strategies Flashcards

6 cards from real AFIP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 AFIP Tax Planning and Retirement Strategies flashcards as text

  1. What is the primary tax advantage of a Traditional IRA contribution for an eligible U.S. taxpayer?

    Answer: Contributions may be tax-deductible, reducing current taxable income

    Traditional IRA contributions may be tax-deductible depending on income and workplace plan participation, reducing the taxpayer's current-year taxable income.

  2. How does a Roth IRA differ from a Traditional IRA regarding tax treatment?

    Answer: Roth IRA contributions are after-tax; qualified withdrawals are tax-free

    Roth IRA contributions are made with after-tax dollars, but qualified withdrawals in retirement are completely tax-free, including earnings.

  3. What is the IRS penalty for taking an early withdrawal from a 401(k) plan before age 59½?

    Answer: 10% penalty tax plus ordinary income tax

    Early withdrawals from a 401(k) before age 59½ are subject to a 10% early withdrawal penalty in addition to ordinary income taxes on the distribution.

  4. What is a Required Minimum Distribution (RMD) and when does it begin for a Traditional IRA?

    Answer: A mandatory annual withdrawal from retirement accounts, beginning at age 73 under SECURE 2.0

    RMDs are mandatory annual withdrawals from tax-deferred retirement accounts; under the SECURE 2.0 Act, they begin at age 73 for most taxpayers.

  5. Which type of annuity provides guaranteed income payments for the rest of the owner's life, regardless of how long they live?

    Answer: Life annuity

    A life annuity guarantees income payments for the duration of the annuitant's lifetime, providing protection against the risk of outliving retirement assets.

  6. What is 'tax-loss harvesting' as a strategy for F&I professionals advising clients on investment accounts?

    Answer: Selling securities at a loss to offset capital gains and reduce tax liability

    Tax-loss harvesting involves strategically selling investments at a loss to offset realized capital gains, thereby reducing the investor's overall tax liability.