CTFA Retirement and Employee Benefits Planning 1 — Questions and Answers
Question 1: What is the required beginning date (RBD) for taking required minimum distributions (RMDs) from a traditional IRA under the SECURE 2.0 Act?
- April 1 following the year the owner turns 73 (Correct answer)
- December 31 of the year the owner turns 70½
- April 1 following the year the owner turns 72
- December 31 of the year the owner retires
Correct answer: April 1 following the year the owner turns 73
Under the SECURE 2.0 Act, the required beginning date for RMDs shifted to April 1 following the year the IRA owner reaches age 73 (as of 2023).
Question 2: Under ERISA, which of the following is the correct definition of a plan fiduciary?
- Anyone who exercises discretionary authority over plan management or assets or provides investment advice for compensation (Correct answer)
- Only the plan sponsor's board of directors
- The plan's named trustee and no one else
- Any service provider who receives payment from the plan
Correct answer: Anyone who exercises discretionary authority over plan management or assets or provides investment advice for compensation
ERISA defines a fiduciary functionally—anyone exercising discretionary control over plan management, assets, or providing investment advice for compensation qualifies.
Question 3: Which type of IRA allows qualified distributions to be completely tax-free in retirement?
- Roth IRA (Correct answer)
- Traditional IRA
- SEP-IRA
- SIMPLE IRA
Correct answer: Roth IRA
Roth IRA contributions are made with after-tax dollars, so qualified distributions of both contributions and earnings are completely income-tax-free in retirement.
Question 4: The 10-year rule under the SECURE Act requires most non-spouse inherited IRA beneficiaries to do which of the following?
- Distribute the entire inherited IRA within 10 years of the owner's death (Correct answer)
- Take required minimum distributions based on their own life expectancy
- Distribute 10% of the account each year for 10 years
- Immediately roll the inherited IRA into their own IRA
Correct answer: Distribute the entire inherited IRA within 10 years of the owner's death
The SECURE Act eliminated the stretch IRA for most non-spouse beneficiaries and requires full distribution of the inherited IRA within 10 years of the original owner's death.
Question 5: Which qualified retirement plan type allows employer contributions only, with no employee elective deferrals?
- Simplified Employee Pension (SEP-IRA) (Correct answer)
- SIMPLE IRA
- 401(k) plan
- 403(b) plan
Correct answer: Simplified Employee Pension (SEP-IRA)
SEP-IRAs are funded exclusively by employer contributions and do not allow employees to make elective salary deferrals.
Question 6: What is the maximum employee elective deferral limit for a 401(k) plan in 2024?
- $23,000 (Correct answer)
- $19,500
- $66,000
- $7,000
Correct answer: $23,000
The IRS limit on employee elective deferrals to 401(k) plans for 2024 is $23,000, with an additional $7,500 catch-up contribution allowed for those age 50 and older.
CTFA Retirement and Employee Benefits Planning 1
What is the required beginning date (RBD) for taking required minimum distributions (RMDs) from a traditional IRA under the SECURE 2.0 Act?