RMA Retirement Planning & Strategies 3

Question 1

A client converts a traditional IRA to a Roth IRA at age 62. When can they take tax-free qualified distributions from the converted amount?

Accepted Answer

After 5 years from the conversion year, provided they are over 59½

Answer

Each Roth conversion starts its own 5-year holding period; however, since the client is over 59½, the 10% penalty does not apply, and distributions are tax-free once the 5-year period for that conversion is satisfied.

Question 2

Which Medicare enrollment period allows individuals to sign up for Parts A and B without penalty if they have qualifying employer coverage?

Accepted Answer

Special Enrollment Period

Answer

The Special Enrollment Period (SEP) allows individuals with qualifying employer group health coverage to delay Medicare enrollment without a late penalty.

Question 3

A retiree wants to guarantee income they cannot outlive without using an annuity. Which Social Security strategy best achieves this?

Accepted Answer

Delaying to age 70 to lock in maximum guaranteed lifetime benefit

Answer

Delaying Social Security to age 70 increases the monthly benefit by 8% per year after FRA, providing the highest guaranteed lifetime income stream.

Question 4

In the context of retirement planning, what is 'sequence of returns risk'?

Accepted Answer

The danger that poor investment returns early in retirement permanently impair a portfolio due to ongoing withdrawals

Answer

Sequence of returns risk occurs when withdrawals combined with early negative returns deplete the portfolio faster than average returns would suggest, leaving less capital to recover.

Question 5

A married couple wants to ensure the surviving spouse continues to receive retirement income. Which annuity payout option is MOST appropriate?

Accepted Answer

Joint and survivor annuity

Answer

A joint and survivor annuity continues payments to the surviving spouse after the primary annuitant's death, ensuring lifetime income for both.

RMA Practice Test

RMA Practice Test

RMA Retirement Planning & Strategies 3