CTFA Retirement and Employee Benefits Planning 2

Question 1

A charitable remainder unitrust (CRUT) differs from a charitable remainder annuity trust (CRAT) in which key way?

Accepted Answer

A CRUT pays a fixed percentage of annually revalued assets; a CRAT pays a fixed dollar amount

Answer

A CRUT is irrevocable; a CRAT can be revoked by the grantor at any time

Answer

A CRUT allows additional contributions; a CRUT does not

Answer

A CRUT benefits only public charities; a CRAT can benefit private foundations

Question 2

Under the minimum distribution rules, what is the penalty for failing to take a required minimum distribution from an IRA?

Accepted Answer

25% excise tax on the amount that should have been distributed (reduced to 10% if corrected timely)

Answer

50% excise tax on the amount that should have been distributed

Answer

Ordinary income tax plus a 10% early withdrawal penalty

Answer

Forfeiture of the entire IRA balance to the IRS

Question 3

Which type of pension plan guarantees a specific monthly benefit at retirement regardless of investment performance?

Accepted Answer

Defined benefit (DB) plan

Answer

Defined contribution (DC) plan

Answer

Cash balance plan

Answer

Money purchase pension plan

Question 4

What is a qualified domestic relations order (QDRO) used for in retirement planning?

Accepted Answer

To assign retirement plan benefits to a former spouse or dependent as part of a divorce settlement

Answer

To name a minor child as a contingent beneficiary on an IRA

Answer

To allow early withdrawal from a 401(k) without penalty for medical expenses

Answer

To transfer IRA assets between financial institutions without tax consequences

Question 5

Under the spousal rollover rules, a surviving spouse who inherits an IRA may do which of the following that other beneficiaries cannot?

Accepted Answer

Roll the inherited IRA into their own IRA and delay RMDs until they reach age 73

Answer

Transfer the IRA to a trust without triggering income taxes

Answer

Elect to receive distributions tax-free as a surviving spouse

Answer

Contribute additional funds to the inherited IRA after rollover

Question 6

Which of the following is the primary difference between a traditional IRA and a Roth IRA with respect to required minimum distributions during the owner's lifetime?

Accepted Answer

Traditional IRAs require RMDs beginning at age 73; Roth IRAs have no RMDs during the owner's lifetime

Answer

Both traditional and Roth IRAs require RMDs beginning at age 73

Answer

Roth IRAs require RMDs beginning at age 59½; traditional IRAs have no RMDs

Answer

Neither traditional nor Roth IRAs require RMDs if the owner is still working