Tax Preparation IRS Rules, Retirement, and Special Topics

Question 1

What is the 2024 contribution limit for a traditional or Roth IRA (under age 50)?

Accepted Answer

$7,000

Answer

The 2024 IRA contribution limit is $7,000 for individuals under age 50, with an additional $1,000 catch-up contribution allowed for those 50 and older.

Question 2

Required Minimum Distributions (RMDs) from traditional IRAs must generally begin at age:

Accepted Answer

73

Answer

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

Question 3

A 52-year-old withdraws $15,000 from a traditional IRA. The early withdrawal penalty does NOT apply because:

Accepted Answer

No exception exists and the penalty applies

Answer

The 10% early withdrawal penalty applies to individuals under age 59½ unless a specific exception (disability, first-home purchase, SEPP, etc.) applies.

Question 4

Contributions to a Roth IRA are made with:

Accepted Answer

After-tax dollars and qualified withdrawals are tax-free

Answer

Roth IRA contributions are nondeductible (made with after-tax money), but qualified distributions, including earnings, are completely tax-free.

Question 5

What is the penalty for failing to take a required minimum distribution from an IRA?

Accepted Answer

25% of the amount not distributed

Answer

The SECURE 2.0 Act reduced the RMD failure penalty from 50% to 25% (and further to 10% if corrected within two years).

Tax Preparation Practice Test

Tax Preparation Practice Test

Tax Preparation IRS Rules, Retirement, and Special Topics