CRPC Required Minimum Distributions and Beneficiary Planning 3

Question 1

What is the Net Unrealized Appreciation (NUA) strategy available with employer retirement plans?

Accepted Answer

A technique allowing employer stock distributed in-kind from a qualified plan to have its appreciation taxed at long-term capital gains rates rather than ordinary income rates

Answer

The NUA strategy allows an employee to take a lump-sum in-kind distribution of employer stock from a qualified plan, paying ordinary income tax only on the cost basis while the appreciation is taxed at preferential long-term capital gains rates when the stock is later sold.

Question 2

What is a Qualified Charitable Distribution (QCD) and how does it interact with an RMD?

Accepted Answer

A direct transfer from an IRA to a qualified charity (up to the annual limit) that counts toward the RMD and is excluded from taxable income

Answer

A QCD allows IRA owners age 70½ or older to transfer up to the annual limit directly from an IRA to a qualified public charity; the amount counts toward the RMD and is excluded from gross income.

Question 3

What is the annual QCD limit per taxpayer in 2024 after SECURE 2.0's inflation indexing provision took effect?

Accepted Answer

$105,000

Answer

SECURE 2.0 indexed the QCD limit to inflation starting in 2024, increasing it to $105,000 per taxpayer per year from the prior fixed $100,000 limit.

Question 4

What is the 'separate account rule' for inherited IRAs, and why is it important for planning?

Accepted Answer

A rule that, when met by December 31 of the year following the owner's death, allows each beneficiary to use their own life expectancy for distribution calculations

Answer

If multiple beneficiaries split an inherited IRA into separate inherited IRA accounts by December 31 of the year following the owner's death, each beneficiary can use their own life expectancy or applicable rule rather than the oldest beneficiary's.

Question 5

What is the significance of the 'September 30 deadline' in inherited IRA beneficiary planning?

Accepted Answer

The date by which non-individual beneficiaries must be cashed out so remaining individuals can use life expectancy-based distributions

Answer

September 30 of the year following the owner's death is the beneficiary finalization date; any non-individual beneficiaries (such as estates or charities) must be cashed out by then so remaining designated beneficiaries can use life expectancy-based distributions.

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC Required Minimum Distributions and Beneficiary Planning 3