CWS CWS Retirement Planning 1 — Questions and Answers
Question 1: What is the 2024 contribution limit for a 401(k) plan for an employee under age 50?
- $20,500
- $22,500
- $23,000 (Correct answer)
- $19,500
Correct answer: $23,000
The 2024 IRS elective deferral limit for 401(k) plans is $23,000 for employees under age 50.
Question 2: Under the SECURE 2.0 Act, what is the required beginning date for required minimum distributions (RMDs) for individuals born in 1951 or later?
- April 1 of the year following the year they turn 70½
- April 1 of the year following the year they turn 72
- April 1 of the year following the year they turn 73 (Correct answer)
- December 31 of the year they turn 73
Correct answer: April 1 of the year following the year they turn 73
SECURE 2.0 raised the RMD starting age to 73 for individuals born between 1951 and 1959, with RMDs beginning April 1 of the following year.
Question 3: A client is 55 years old and separates from service from their employer. Under which circumstance can they take penalty-free 401(k) withdrawals?
- They must wait until age 59½
- Using the Rule of 55 since separation occurs at or after age 55 (Correct answer)
- They must roll over to an IRA first
- Only if they have a disability
Correct answer: Using the Rule of 55 since separation occurs at or after age 55
The Rule of 55 allows penalty-free 401(k) withdrawals if you separate from service in or after the year you turn 55.
Question 4: Which Social Security claiming strategy involves one spouse claiming spousal benefits while the other defers their own benefit to grow?
- File and suspend
- Restricted application (Correct answer)
- Delayed retirement credits
- Windfall elimination provision
Correct answer: Restricted application
The restricted application strategy allows a spouse to claim spousal benefits at full retirement age while letting their own benefit grow to age 70.
Question 5: What is a defined benefit pension plan's primary advantage over a defined contribution plan from a retiree's perspective?
- Higher investment control
- Guaranteed lifetime income regardless of market performance (Correct answer)
- Tax-free distributions
- No vesting requirements
Correct answer: Guaranteed lifetime income regardless of market performance
Defined benefit plans provide a predictable, guaranteed income stream for life, eliminating longevity and investment risk for the retiree.
Question 6: What is the catch-up contribution limit for individuals aged 60–63 under SECURE 2.0 starting in 2025?
- $7,500
- $10,000
- $11,250 (Correct answer)
- $12,500
Correct answer: $11,250
SECURE 2.0 created a super catch-up contribution of $11,250 for 401(k) participants aged 60–63 beginning in 2025.
CWS CWS Retirement Planning 1
What is the 2024 contribution limit for a 401(k) plan for an employee under age 50?