RMA Case Analysis & Practical Application 2

Question 1

A 68-year-old widow has $800,000 in a traditional IRA, receives $2,200/month Social Security, and needs $5,000/month to cover expenses. Her RMA adviser calculates her annual portfolio withdrawal rate at approximately what level?

Accepted Answer

5.4%

Answer

She needs $5,000 - $2,200 = $2,800/month ($33,600/year) from the portfolio; $33,600 / $800,000 ≈ 4.2%—wait, recalculating: $33,600/$800,000 = 4.2%, so the correct answer is 4.2%.

Question 2

A client's Monte Carlo simulation shows a 78% probability of portfolio success over a 30-year retirement. The RMA adviser's BEST immediate recommendation is to:

Accepted Answer

Reduce initial withdrawal rate or identify spending flexibility

Answer

A 78% success rate falls below the typical 85-90% threshold advisers target, so reducing withdrawals or identifying discretionary spending cuts is the appropriate first step.

Question 3

A 70-year-old client delays taking RMDs from his $1.2M IRA for two years inadvertently. Under current law, the penalty he faces on the missed distributions is:

Accepted Answer

25% of the missed RMD amount, reducible to 10% if corrected promptly

Answer

SECURE 2.0 reduced the RMD failure penalty from 50% to 25%, further reducible to 10% if the shortfall is corrected within the correction window.

Question 4

Married clients (ages 67 and 63) ask about Social Security claiming strategy. The higher earner receives $3,200/month at FRA; the lower earner receives $1,400/month at FRA. The RMA-recommended approach to maximize lifetime survivor income is:

Accepted Answer

Higher earner delays to 70; lower earner claims at 62

Answer

Delaying the higher earner's benefit to 70 maximizes the survivor benefit, while the lower earner claims early to provide current income—a common longevity-protection strategy.

Question 5

A client's retirement income plan relies heavily on a single-premium immediate annuity (SPIA). Which risk does the SPIA address most directly?

Accepted Answer

Longevity risk

Answer

A SPIA provides guaranteed income for life, directly addressing longevity risk by ensuring the client cannot outlive that income stream.

RMA Practice Test

RMA Practice Test

RMA Case Analysis & Practical Application 2