CFC Retirement Planning 1

Question 1

What is the 2024 annual contribution limit for a 401(k) plan for employees under age 50?

Accepted Answer

$23,000

Answer

For 2024, the employee elective deferral limit for 401(k) plans is $23,000 for participants under age 50.

Question 2

Under IRS rules, required minimum distributions (RMDs) from traditional IRAs must generally begin at age:

Accepted Answer

73

Answer

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

Question 3

Which retirement plan feature allows employees to make after-tax contributions that grow tax-free?

Accepted Answer

Roth 401(k)

Answer

Roth 401(k) contributions are made with after-tax dollars, and qualified withdrawals including earnings are entirely tax-free.

Question 4

A defined benefit pension plan provides retirement income based on:

Accepted Answer

A formula using salary and years of service

Answer

Defined benefit plans calculate benefits using a formula that typically incorporates final average salary, years of service, and a benefit multiplier.

Question 5

The '4% rule' in retirement planning suggests retirees can withdraw 4% of their initial portfolio annually with a high probability of:

Accepted Answer

Not outliving assets over a 30-year retirement

Answer

Research by Bengen showed that a 4% initial withdrawal rate, adjusted annually for inflation, historically sustained a 30-year retirement across market cycles.

CFC - Certified Financial Consultant Practice Test

CFC - Certified Financial Consultant Practice Test

CFC Retirement Planning 1