AFK AFK Retirement Planning 1 — Questions and Answers
Question 1: What is the contribution limit for a traditional IRA for individuals under age 50 in 2024?
- $6,000
- $7,000 (Correct answer)
- $6,500
- $5,500
Correct answer: $7,000
The 2024 IRA contribution limit is $7,000 for individuals under age 50.
Question 2: At what age must required minimum distributions (RMDs) begin for traditional IRA holders under the SECURE 2.0 Act?
- 70½
- 72
- 73 (Correct answer)
- 75
Correct answer: 73
SECURE 2.0 Act raised the RMD starting age to 73 for individuals born between 1951 and 1959.
Question 3: Which type of retirement account allows qualified withdrawals to be taken tax-free in retirement?
- Traditional IRA
- Roth IRA (Correct answer)
- SEP IRA
- SIMPLE IRA
Correct answer: Roth IRA
Roth IRA contributions are made with after-tax dollars, so qualified withdrawals in retirement are tax-free.
Question 4: What is the catch-up contribution amount for 401(k) plans for participants aged 50 and older in 2024?
- $3,000
- $5,000
- $6,500
- $7,500 (Correct answer)
Correct answer: $7,500
In 2024, participants aged 50 and older may make an additional catch-up contribution of $7,500 to a 401(k).
Question 5: A defined benefit pension plan promises retirees a benefit based primarily on which factor?
- Total investment returns
- Years of service and salary history (Correct answer)
- Employee contribution amount
- Social Security benefits received
Correct answer: Years of service and salary history
Defined benefit plans calculate retirement income using a formula based on years of service and final or average salary.
Question 6: What penalty applies to early withdrawals from a traditional IRA before age 59½, absent an exception?
- 5%
- 10% (Correct answer)
- 15%
- 20%
Correct answer: 10%
Early withdrawals from a traditional IRA before age 59½ are subject to a 10% early withdrawal penalty in addition to ordinary income tax.
AFK AFK Retirement Planning 1
What is the contribution limit for a traditional IRA for individuals under age 50 in 2024?