Retirement Plans and Taxation Flashcards
7 cards from real Series 65 – Uniform Investment Adviser Law Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Retirement Plans and Taxation flashcards as text
What is the annual contribution limit for a Traditional IRA for an individual under age 50 in 2024?
Answer: $7,000
The 2024 IRA contribution limit is $7,000 for individuals under age 50, up from $6,500 in 2023.
Which of the following best describes a Roth IRA's tax treatment?
Answer: Contributions are after-tax; qualified withdrawals are tax-free
Roth IRA contributions are made with after-tax dollars, and qualified distributions in retirement are completely tax-free.
An individual participates in a 401(k) plan and also wants to contribute to a Traditional IRA. Which factor determines whether the IRA contribution is tax-deductible?
Answer: The individual's modified adjusted gross income (MAGI)
When an active participant in an employer plan contributes to a Traditional IRA, deductibility phases out based on the individual's MAGI.
At what age must Required Minimum Distributions (RMDs) begin for most retirement accounts under current law (SECURE 2.0)?
Answer: 73
Under SECURE 2.0 Act (effective 2023), the RMD starting age was raised to 73 for individuals born between 1951 and 1959.
Which retirement plan type requires the employer to contribute a specific benefit amount to each eligible employee's account based on years of service and compensation?
Answer: Defined benefit plan
A defined benefit plan promises a specified monthly benefit at retirement, typically based on salary history and years of service.
What is the penalty for taking an early withdrawal from a Traditional IRA before age 59½, assuming no exception applies?
Answer: 10% penalty plus ordinary income tax
Early withdrawals from a Traditional IRA are subject to a 10% penalty plus ordinary income tax on the full amount withdrawn.
Which of the following is NOT a qualifying exception to the 10% early withdrawal penalty from an IRA?
Answer: Purchasing a second vacation home
Purchasing a second vacation home is not a recognized exception; only a first-time home purchase up to $10,000 qualifies.