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IRS Rules, Retirement, and Special Topics Flashcards

6 cards from real Tax Preparation practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 IRS Rules, Retirement, and Special Topics flashcards as text

  1. What is the 2024 contribution limit for a traditional or Roth IRA (under age 50)?

    Answer: $7,000

    The 2024 IRA contribution limit is $7,000 for individuals under age 50, with an additional $1,000 catch-up contribution allowed for those 50 and older.

  2. Required Minimum Distributions (RMDs) from traditional IRAs must generally begin at age:

    Answer: 73

    The SECURE 2.0 Act raised the RMD starting age to 73 for individuals who turn 72 after December 31, 2022.

  3. A 52-year-old withdraws $15,000 from a traditional IRA. The early withdrawal penalty does NOT apply because:

    Answer: No exception exists and the penalty applies

    The 10% early withdrawal penalty applies to individuals under age 59½ unless a specific exception (disability, first-home purchase, SEPP, etc.) applies.

  4. Contributions to a Roth IRA are made with:

    Answer: After-tax dollars and qualified withdrawals are tax-free

    Roth IRA contributions are nondeductible (made with after-tax money), but qualified distributions, including earnings, are completely tax-free.

  5. What is the penalty for failing to take a required minimum distribution from an IRA?

    Answer: 25% of the amount not distributed

    The SECURE 2.0 Act reduced the RMD failure penalty from 50% to 25% (and further to 10% if corrected within two years).

  6. The Net Investment Income Tax (NIIT) of 3.8% applies to which taxpayers?

    Answer: Taxpayers with MAGI over $200,000 (single) or $250,000 (MFJ)

    The 3.8% NIIT applies to the lesser of net investment income or the amount by which MAGI exceeds $200,000 for singles ($250,000 for MFJ).

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