Retirement Planning and Tax Strategies Flashcards
6 cards from real Investment Advisor practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Retirement Planning and Tax Strategies flashcards as text
What is the annual contribution limit for a Traditional IRA for individuals under age 50 in 2024?
Answer: $7,000
In 2024, the IRA contribution limit for individuals under age 50 is $7,000, while those 50 and older can contribute $8,000 with the catch-up provision.
At what age must holders of Traditional IRAs begin taking Required Minimum Distributions (RMDs)?
Answer: 73
The SECURE 2.0 Act changed the RMD starting age to 73 for individuals who reach age 72 after December 31, 2022.
A Roth IRA differs from a Traditional IRA primarily in that:
Answer: Roth contributions are after-tax but qualified withdrawals are tax-free
Roth IRA contributions are made with after-tax dollars, but qualified withdrawals in retirement are completely tax-free, including earnings.
Which retirement plan type allows self-employed individuals the highest contribution limits?
Answer: Solo 401(k)
A Solo 401(k) allows self-employed individuals to contribute as both employee and employer, with combined 2024 limits of up to $69,000 ($76,500 with catch-up).
What is the penalty for taking an early withdrawal from a Traditional IRA before age 59½?
Answer: 10% early withdrawal penalty plus income taxes
Early IRA withdrawals before age 59½ are subject to a 10% penalty tax plus ordinary income taxes on the withdrawn amount, with certain exceptions.
A 401(k) plan's annual employee contribution limit for 2024 is:
Answer: $23,000
The 2024 employee contribution limit for 401(k) plans is $23,000, with an additional $7,500 catch-up contribution allowed for those age 50 and older.