WMS Retirement and Estate Planning 3

Question 1

A client inherits a traditional IRA from a non-spouse in 2024. Under the SECURE Act, by when must distributions be completed?

Accepted Answer

10 years from the decedent's death

Answer

The SECURE Act eliminated the stretch IRA for most non-spouse beneficiaries, requiring full distribution within 10 years of the account owner's death.

Question 2

Which defined benefit plan formula bases retirement benefits on the average of an employee's highest-earning years and years of service?

Accepted Answer

Final average pay formula

Answer

The final average pay formula calculates benefits based on the average of the employee's highest compensation years multiplied by years of service.

Question 3

A testator wants certain assets to bypass probate and pass directly to named beneficiaries. Which of the following accomplishes this for a brokerage account?

Accepted Answer

Titling the account as Transfer on Death (TOD)

Answer

A Transfer on Death (TOD) designation allows brokerage account assets to pass directly to named beneficiaries outside of probate.

Question 4

Which provision in a defined benefit pension plan guarantees a surviving spouse at least 50% of the participant's accrued benefit if the participant dies before retirement?

Accepted Answer

Qualified Pre-Retirement Survivor Annuity (QPSA)

Answer

The QPSA provides the surviving spouse with at least 50% of the participant's vested accrued benefit if the participant dies before the annuity starting date.

Question 5

A couple uses a bypass trust (credit shelter trust) in their estate plan. What is the primary benefit of this structure?

Accepted Answer

It shelters assets up to the exemption amount from estate tax on the second spouse's death

Answer

A bypass trust holds assets up to the applicable exclusion amount so they are not included in the surviving spouse's taxable estate, effectively using both spouses' exemptions.

(WMS) Wealth Management Specialist Certification Practice Test

(WMS) Wealth Management Specialist Certification Practice Test

WMS Retirement and Estate Planning 3