AAMS Retirement Planning & Distribution Strategies 2

Question 1

Which of the following is a key advantage of a defined benefit (DB) pension plan over a defined contribution (DC) plan?

Accepted Answer

Employer bears the investment risk and guarantees benefits

Answer

Employee bears the investment risk

Answer

Employee controls investment options

Answer

Benefits depend on account balance at retirement

Question 2

What does the term 'vesting' mean in the context of employer-sponsored retirement plans?

Accepted Answer

Employee's non-forfeitable right to employer contributions

Answer

Employee's right to make plan contributions

Answer

Maximum contribution allowed per year

Answer

Penalty for early withdrawal

Question 3

Which distribution strategy systematically withdraws from taxable accounts first, then tax-deferred, then tax-free to maximize tax efficiency?

Accepted Answer

Traditional sequencing strategy

Answer

Bucket strategy

Answer

Systematic withdrawal plan

Answer

Roth conversion ladder

Question 4

Under the SECURE Act (2019), most non-spouse beneficiaries inheriting an IRA must deplete the account within:

Accepted Answer

10 years

Answer

5 years

Answer

15 years

Answer

Their life expectancy

Question 5

Which of the following individuals qualifies for a Health Savings Account (HSA) to supplement retirement medical expenses?

Accepted Answer

An employee enrolled in a High-Deductible Health Plan (HDHP)

Answer

An employee enrolled in a traditional PPO plan

Answer

A Medicare-enrolled retiree over age 65

Answer

A Medicaid recipient

Question 6

A client converts $50,000 from a traditional IRA to a Roth IRA. The primary tax consequence is:

Accepted Answer

The $50,000 is added to ordinary income for the year

Answer

No tax due if under age 59½

Answer

Capital gains tax applies on the converted amount

Answer

A 10% penalty on the full conversion

Question 7

What is 'longevity risk' in retirement planning?

Accepted Answer

The risk of outliving one's assets

Answer

The risk of poor investment performance

Answer

The risk of inflation eroding purchasing power

Answer

The risk of losing Social Security benefits