Retirement Planning Flashcards
6 cards from real CFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Retirement Planning flashcards as text
What is the 2024 annual contribution limit for a 401(k) plan for employees under age 50?
Answer: $23,000
For 2024, the employee elective deferral limit for 401(k) plans is $23,000 for participants under age 50.
Under IRS rules, required minimum distributions (RMDs) from traditional IRAs must generally begin at age:
Answer: 73
The SECURE 2.0 Act raised the RMD starting age to 73 for individuals who reach age 72 after December 31, 2022.
Which retirement plan feature allows employees to make after-tax contributions that grow tax-free?
Answer: Roth 401(k)
Roth 401(k) contributions are made with after-tax dollars, and qualified withdrawals including earnings are entirely tax-free.
A defined benefit pension plan provides retirement income based on:
Answer: A formula using salary and years of service
Defined benefit plans calculate benefits using a formula that typically incorporates final average salary, years of service, and a benefit multiplier.
The '4% rule' in retirement planning suggests retirees can withdraw 4% of their initial portfolio annually with a high probability of:
Answer: Not outliving assets over a 30-year retirement
Research by Bengen showed that a 4% initial withdrawal rate, adjusted annually for inflation, historically sustained a 30-year retirement across market cycles.
Which retirement account allows self-employed individuals to contribute both as employer and employee, potentially contributing up to 25% of compensation plus elective deferrals?
Answer: Solo 401(k)
A Solo 401(k) allows self-employed individuals to make both employee elective deferrals and employer profit-sharing contributions, maximizing contribution potential.