RFC Retirement & Estate Planning Fundamentals 2 — Questions and Answers
Question 1: A surviving spouse inherits a traditional IRA from their deceased spouse. Which option is unique to a surviving spouse that other beneficiaries do not have?
- Roll the IRA into their own IRA and delay RMDs to age 73 (Correct answer)
- Disclaim the IRA within 18 months of death
- Take a lump-sum distribution penalty-free regardless of age
- Stretch distributions over 5 years from date of death
Correct answer: Roll the IRA into their own IRA and delay RMDs to age 73
A surviving spouse can roll an inherited IRA into their own IRA, treating it as their own and delaying RMDs until they reach age 73.
Question 2: What is the primary purpose of a pour-over will in estate planning?
- To reduce estate taxes by pouring assets into a charitable trust
- To direct probate assets into a revocable living trust at death (Correct answer)
- To provide income to a surviving spouse during probate
- To name a guardian for minor children without involving a trust
Correct answer: To direct probate assets into a revocable living trust at death
A pour-over will directs any assets not already titled in the trust to 'pour over' into the revocable living trust upon death.
Question 3: Under SECURE Act 2.0, what is the catch-up contribution limit for employees aged 60–63 participating in a 401(k) plan starting in 2025?
- $7,500 — same as the standard catch-up
- $10,000 or 150% of the regular catch-up, whichever is greater (Correct answer)
- $15,000 flat regardless of plan type
- $12,500 for SIMPLE plans only
Correct answer: $10,000 or 150% of the regular catch-up, whichever is greater
SECURE Act 2.0 created a super catch-up for ages 60–63 equal to the greater of $10,000 or 150% of the regular catch-up amount, indexed for inflation.
Question 4: Which trust structure allows a grantor to transfer appreciating assets out of the estate while retaining an annuity stream for a fixed term?
- Charitable Remainder Annuity Trust (CRAT)
- Grantor Retained Annuity Trust (GRAT) (Correct answer)
- Qualified Personal Residence Trust (QPRT)
- Spousal Lifetime Access Trust (SLAT)
Correct answer: Grantor Retained Annuity Trust (GRAT)
A GRAT transfers appreciation above the IRS hurdle rate (Section 7520 rate) to heirs gift-tax free while the grantor receives annuity payments for the trust term.
Question 5: A client with a $4 million estate wants to minimize estate taxes while making a significant charitable gift. Which strategy provides an income stream to the client and a remainder to charity?
- Donor-Advised Fund
- Charitable Lead Annuity Trust (CLAT)
- Charitable Remainder Unitrust (CRUT) (Correct answer)
- Private Foundation
Correct answer: Charitable Remainder Unitrust (CRUT)
A CRUT pays a percentage of the annually revalued trust assets to the client (or other non-charitable beneficiary) with the remainder passing to charity.
Question 6: In Social Security planning, what is the maximum percentage by which delayed retirement credits increase a worker's benefit if they wait until age 70?
- 24% above the full retirement age benefit
- 32% above the full retirement age benefit (Correct answer)
- 40% above the full retirement age benefit
- 50% above the full retirement age benefit
Correct answer: 32% above the full retirement age benefit
For those born in 1943 or later, delayed retirement credits accumulate at 8% per year, resulting in a 32% increase if claiming is deferred from FRA (67) to age 70.
Question 7: Which estate planning document grants another person authority to make healthcare decisions on the principal's behalf if the principal becomes incapacitated?
- Durable Power of Attorney for Finances
- Healthcare Proxy (Healthcare Power of Attorney) (Correct answer)
- Living Will (Advance Directive)
- Revocable Living Trust
Correct answer: Healthcare Proxy (Healthcare Power of Attorney)
A healthcare proxy (or healthcare power of attorney) designates an agent to make medical decisions for the principal when they are unable to do so.
RFC Retirement & Estate Planning Fundamentals 2
A surviving spouse inherits a traditional IRA from their deceased spouse.
Which option is unique to a surviving spouse that other beneficiaries do not have?