IRA Certified IRA Services Professional 4

Question 1

A non-spouse beneficiary who inherited an IRA from someone who died in 2020 is generally subject to which distribution rule under the SECURE Act?

Accepted Answer

10-year rule

Answer

The SECURE Act replaced the stretch IRA with the 10-year rule for most non-spouse beneficiaries of decedents dying after December 31, 2019.

Question 2

Which category of beneficiary is still permitted to use the life expectancy (stretch) method for inherited IRA distributions?

Accepted Answer

Eligible designated beneficiaries (e.g., surviving spouse, minor child, disabled individual)

Answer

Eligible designated beneficiaries (EDBs), including surviving spouses, minor children of the deceased, chronically ill individuals, and those not more than 10 years younger, may still use the stretch method.

Question 3

What is the annual IRA contribution limit for an individual age 55 in 2024?

Accepted Answer

$8,000

Answer

In 2024, individuals age 50 or older may contribute up to $8,000 to an IRA ($7,000 base + $1,000 catch-up).

Question 4

An individual has both deductible and nondeductible Traditional IRA funds. When they take a distribution, how is the taxable amount calculated?

Accepted Answer

Pro-rata rule based on total IRA balances

Answer

The pro-rata rule requires that each distribution be treated as coming proportionally from pre-tax and after-tax (basis) amounts across all Traditional IRAs.

Question 5

Which transaction allows an IRA owner to move funds directly from a Traditional IRA to a Roth IRA without the funds passing through the owner's hands?

Accepted Answer

Direct conversion (trustee-to-trustee transfer)

Answer

A direct (trustee-to-trustee) conversion moves funds directly between the custodians, avoiding the 60-day rule and withholding complications.

IRA - Individual Retirement Account Practice Test

IRA - Individual Retirement Account Practice Test

IRA Certified IRA Services Professional 4