AFTR Retirement Accounts and Tax Treatment

Question 1

What is the 2024 contribution limit for a traditional IRA for taxpayers under age 50?

Accepted Answer

$7,000

Answer

For 2024, the IRA contribution limit increased to $7,000 for taxpayers under age 50.

Question 2

At what age must required minimum distributions (RMDs) generally begin under SECURE 2.0 Act provisions effective in 2023?

Accepted Answer

73

Answer

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

Question 3

Which of the following retirement account types allows qualified withdrawals to be completely tax-free?

Accepted Answer

Roth IRA

Answer

Roth IRA qualified distributions are tax-free because contributions are made with after-tax dollars.

Question 4

What penalty applies to early distributions from a traditional IRA taken before age 59½, absent a qualifying exception?

Accepted Answer

10%

Answer

A 10% early withdrawal penalty applies to taxable distributions from traditional IRAs before age 59½ unless an exception applies.

Question 5

A taxpayer who is an active participant in an employer retirement plan with AGI above the phase-out range may:

Accepted Answer

Contribute to a traditional IRA but lose the deduction

Answer

Active participants above the phase-out range can still contribute to a traditional IRA but cannot deduct the contribution, resulting in a nondeductible contribution.

AFTR - Annual Federal Tax Refresher Practice Test

AFTR - Annual Federal Tax Refresher Practice Test

AFTR Retirement Accounts and Tax Treatment