CRPC Retirement Income Taxation 4

Question 1

A client receives $18,000 per year from a pension. He contributed $30,000 after-tax to the plan. Using the Simplified Method with 240 expected payments, what is his monthly tax-free exclusion?

Accepted Answer

$125

Answer

$30,000 ÷ 240 payments = $125 per month excluded from taxable income.

Question 2

IRMAA (Income-Related Monthly Adjustment Amount) affects retirees by surcharging which of the following?

Accepted Answer

Medicare Part B and Part D premiums

Answer

IRMAA adds income-based surcharges to Medicare Part B and Part D premiums for retirees whose MAGI exceeds certain thresholds.

Question 3

A client withdraws $20,000 from her 401(k) at age 45 due to a total and permanent disability. What is the tax treatment?

Accepted Answer

Taxable as ordinary income but no 10% penalty

Answer

Disability is an exception to the 10% early withdrawal penalty, so the distribution is taxable as ordinary income but avoids the additional 10% penalty.

Question 4

Which of the following retirement income sources is generally exempt from federal income taxation?

Accepted Answer

Roth IRA qualified distributions

Answer

Qualified Roth IRA distributions are federal income tax-free because contributions were made with after-tax dollars and the account meets age and holding period requirements.

Question 5

A client has a traditional IRA with $200,000 and a Roth IRA with $100,000. His total RMD for the year is $8,000. From which account(s) can the RMD be taken?

Accepted Answer

From the traditional IRA only, or any combination of traditional IRAs

Answer

RMDs apply only to traditional IRAs (and other pre-tax accounts); Roth IRAs are not subject to RMDs during the owner's lifetime.

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC Retirement Income Taxation 4