WMS Retirement and Estate Planning 2

Question 1

A married couple wants to minimize estate taxes by transferring assets to each other. Which provision allows an unlimited transfer between spouses without triggering gift or estate tax?

Accepted Answer

Marital deduction

Answer

The unlimited marital deduction allows spouses to transfer any amount of assets to each other free of federal gift or estate tax.

Question 2

A client age 55 withdraws $20,000 from her traditional IRA due to a financial hardship. Which tax consequence applies?

Accepted Answer

10% early withdrawal penalty plus ordinary income tax

Answer

Withdrawals from a traditional IRA before age 59½ are subject to ordinary income tax plus a 10% early withdrawal penalty unless an exception applies.

Question 3

Which estate planning tool allows a grantor to transfer assets to heirs while retaining an annuity stream for a fixed term, potentially reducing gift tax?

Accepted Answer

Grantor Retained Annuity Trust (GRAT)

Answer

A GRAT allows the grantor to transfer appreciation above the IRS hurdle rate to beneficiaries gift-tax free by retaining an annuity for a set term.

Question 4

Under SECURE Act 2.0, what is the required beginning date for RMDs for individuals who turn 73 in 2024?

Accepted Answer

April 1 of the year following the year they turn 73

Answer

Under SECURE Act 2.0, individuals who reach age 73 must begin RMDs by April 1 of the following calendar year.

Question 5

A 401(k) plan participant leaves her employer at age 55. She wants penalty-free access to her 401(k) funds. Which rule may allow this?

Accepted Answer

Rule of 55

Answer

The Rule of 55 allows penalty-free withdrawals from a 401(k) if the participant separates from service in or after the year they turn 55.

(WMS) Wealth Management Specialist Certification Practice Test

(WMS) Wealth Management Specialist Certification Practice Test

WMS Retirement and Estate Planning 2