CFP Retirement Planning & Distribution Strategies 1 — Questions and Answers
Question 1: What is the maximum annual contribution limit for a Traditional IRA for taxpayers under age 50 in 2024?
- $6,000
- $7,000 (Correct answer)
- $6,500
- $8,000
Correct answer: $7,000
In 2024, the annual IRA contribution limit is $7,000 for individuals under age 50.
Question 2: Under the required minimum distribution (RMD) rules, at what age must a traditional IRA owner begin taking RMDs as of 2023?
- 70½
- 72
- 73 (Correct answer)
- 75
Correct answer: 73
SECURE 2.0 Act raised the RMD starting age to 73 for individuals who reach age 72 after December 31, 2022.
Question 3: Which retirement account type allows tax-free qualified distributions in retirement and has no required minimum distributions during the owner's lifetime?
- Traditional IRA
- SEP-IRA
- Roth IRA (Correct answer)
- SIMPLE IRA
Correct answer: Roth IRA
Roth IRAs provide tax-free qualified distributions and do not impose RMDs on the original owner during their lifetime.
Question 4: What is the penalty for early withdrawal from a traditional IRA before age 59½, in addition to ordinary income taxes?
- 5%
- 10% (Correct answer)
- 15%
- 20%
Correct answer: 10%
Early withdrawals from a traditional IRA before age 59½ are subject to a 10% additional tax penalty on top of ordinary income taxes.
Question 5: Which of the following is NOT a qualified exception to the 10% early withdrawal penalty from an IRA?
- Disability
- First-time home purchase (up to $10,000)
- Paying off credit card debt (Correct answer)
- Substantially equal periodic payments (72(t))
Correct answer: Paying off credit card debt
Paying off credit card debt is not a qualified exception to the early withdrawal penalty; exceptions are limited to specific IRS-approved hardship situations.
Question 6: What is the contribution limit for a 401(k) plan for employees under age 50 in 2024?
- $19,500
- $20,500
- $22,500
- $23,000 (Correct answer)
Correct answer: $23,000
The 401(k) employee contribution limit for 2024 is $23,000 for individuals under age 50.
CFP Retirement Planning & Distribution Strategies 1
What is the maximum annual contribution limit for a Traditional IRA for taxpayers under age 50 in 2024?