RMA Case Analysis & Practical Application 3

Question 1

A 72-year-old client has a $400,000 IRA and a $200,000 Roth IRA. His life factor from the IRS Uniform Lifetime Table is 27.4. His RMD for the year is approximately:

Accepted Answer

$14,599

Answer

RMD = $400,000 / 27.4 ≈ $14,599; Roth IRAs owned by the original owner have no RMD requirement.

Question 2

A client aged 74 wants to reduce her estate and avoid RMDs on charitable gifts. The MOST tax-efficient strategy is:

Accepted Answer

Qualified Charitable Distribution (QCD) directly to charity from IRA

Answer

A QCD satisfies the RMD requirement, excludes up to $105,000 (indexed) from gross income, and directly benefits the charity—making it the most efficient option for charitable-minded IRA owners.

Question 3

A client retired at 60 with $1.5M in a 401(k) and needs income before 59½ penalties expire. Which rule allows penalty-free access to the 401(k) without triggering the 10% early withdrawal penalty?

Accepted Answer

Rule of 55

Answer

The Rule of 55 allows penalty-free 401(k) distributions if the participant separates from service in or after the year they turn 55.

Question 4

A retired couple has $120,000 in combined Social Security income and $30,000 in traditional IRA withdrawals annually. What percentage of their Social Security benefit is potentially taxable?

Accepted Answer

Up to 85%

Answer

With combined income ($30,000 + half of $120,000 = $90,000) well above the $44,000 threshold for married filers, up to 85% of Social Security may be included in taxable income.

Question 5

A client is evaluating a variable annuity with a guaranteed lifetime withdrawal benefit (GLWB) rider. The key advantage of a GLWB over a SPIA for retirement income planning is:

Accepted Answer

Potential for upside market participation while guaranteeing a minimum income floor

Answer

A GLWB rider allows the account to grow with market performance while guaranteeing a minimum withdrawal percentage for life, unlike a SPIA which irrevocably exchanges principal for income.

RMA Practice Test

RMA Practice Test

RMA Case Analysis & Practical Application 3