FFC FFC Retirement and Estate Planning

Question 1

At what age must traditional IRA and 401(k) account holders begin taking Required Minimum Distributions (RMDs) under current U.S. law (SECURE 2.0)?

Accepted Answer

73

Answer

Under the SECURE 2.0 Act enacted in 2022, the RMD starting age was raised to 73 for individuals who turn 72 after December 31, 2022.

Question 2

What is the primary function of a revocable living trust in estate planning?

Accepted Answer

To allow assets to pass to heirs without going through probate

Answer

A revocable living trust allows assets held in the trust to transfer directly to beneficiaries upon death, bypassing the probate process and maintaining privacy.

Question 3

Which Social Security claiming strategy generally maximizes lifetime benefits for a healthy individual who can delay claiming?

Accepted Answer

Delaying until age 70 to maximize monthly benefit

Answer

Delaying Social Security until age 70 increases benefits by approximately 8% per year beyond full retirement age, maximizing monthly income for those with longer life expectancies.

Question 4

What document grants a designated person the authority to make financial decisions on behalf of another if they become incapacitated?

Accepted Answer

Durable power of attorney

Answer

A durable power of attorney remains effective even if the principal becomes mentally incapacitated, allowing the agent to manage financial affairs on their behalf.

Question 5

In retirement planning, what does the '4% rule' suggest?

Accepted Answer

Withdraw no more than 4% of your portfolio in the first year of retirement, adjusting for inflation thereafter

Answer

The 4% rule is a guideline suggesting retirees can withdraw 4% of their portfolio in year one, then adjust for inflation, with a high probability of not outliving assets over a 30-year retirement.

(FFC) Financial Fitness Coach Certification Practice Test

(FFC) Financial Fitness Coach Certification Practice Test

FFC FFC Retirement and Estate Planning