RMA Taxation & Legal Considerations in Retirement 2

Question 1

A retiree converts $50,000 from a traditional IRA to a Roth IRA in 2024. How is this conversion taxed?

Accepted Answer

The $50,000 is added to ordinary income and taxed at the retiree's marginal rate

Answer

Roth conversions are fully taxable as ordinary income in the year of conversion, regardless of the account owner's age.

Question 2

Which of the following Social Security benefit strategies was eliminated by the Bipartisan Budget Act of 2015?

Accepted Answer

File-and-suspend for spousal benefits

Answer

The file-and-suspend strategy that allowed one spouse to suspend benefits while the other collected spousal benefits was eliminated in 2015.

Question 3

Under the Government Pension Offset (GPO), how much is a spousal Social Security benefit reduced for each dollar of a government pension?

Accepted Answer

Two-thirds of the government pension amount

Answer

The GPO reduces spousal or survivor Social Security benefits by two-thirds of the amount of the government pension.

Question 4

A married couple filing jointly has $85,000 in combined income including Social Security. What percentage of Social Security benefits may be subject to federal tax?

Accepted Answer

Up to 85%

Answer

Up to 85% of Social Security benefits are taxable for married couples filing jointly with combined income above $44,000.

Question 5

What is the primary purpose of a Qualified Longevity Annuity Contract (QLAC) in retirement planning?

Accepted Answer

To defer RMDs on a portion of IRA assets and provide income at advanced ages

Answer

A QLAC allows retirees to use a portion of IRA assets to purchase a deferred annuity that starts at a later age, reducing RMDs in the interim.

RMA Practice Test

RMA Practice Test

RMA Taxation & Legal Considerations in Retirement 2