RMA Taxation & Legal Considerations in Retirement 3

Question 1

A retiree withdraws $20,000 from a traditional IRA at age 57 due to a financial hardship. What is the penalty in addition to income taxes?

Accepted Answer

10% early withdrawal penalty

Answer

Withdrawals from a traditional IRA before age 59½ are subject to a 10% early withdrawal penalty unless a specific exception applies.

Question 2

Which of the following is NOT a valid exception to the 10% early withdrawal penalty from an IRA?

Accepted Answer

General financial hardship

Answer

General financial hardship is not a recognized exception to the 10% early IRA withdrawal penalty, unlike the other options listed.

Question 3

What is the estate tax annual exclusion amount for gifts in 2024?

Accepted Answer

$18,000 per recipient

Answer

The annual gift tax exclusion was increased to $18,000 per recipient in 2024, indexed for inflation.

Question 4

Under ERISA, who is considered a fiduciary with respect to an employee benefit plan?

Accepted Answer

Anyone who exercises discretionary authority or control over plan management or assets

Answer

ERISA broadly defines a fiduciary as any person who exercises discretionary authority or control over plan management, assets, or administration.

Question 5

A surviving spouse inherits a traditional IRA from their deceased spouse. Which special option is available only to a surviving spouse?

Accepted Answer

Roll the inherited IRA into their own IRA and treat it as their own

Answer

Surviving spouses uniquely may roll an inherited IRA into their own IRA, allowing them to defer RMDs based on their own age and beneficiary rules.

RMA Practice Test