Retirement Planning & Strategies Flashcards
7 cards from real RMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Retirement Planning & Strategies flashcards as text
A client converts a traditional IRA to a Roth IRA at age 62. When can they take tax-free qualified distributions from the converted amount?
Answer: After 5 years from the conversion year, provided they are over 59½
Each Roth conversion starts its own 5-year holding period; however, since the client is over 59½, the 10% penalty does not apply, and distributions are tax-free once the 5-year period for that conversion is satisfied.
Which Medicare enrollment period allows individuals to sign up for Parts A and B without penalty if they have qualifying employer coverage?
Answer: Special Enrollment Period
The Special Enrollment Period (SEP) allows individuals with qualifying employer group health coverage to delay Medicare enrollment without a late penalty.
A retiree wants to guarantee income they cannot outlive without using an annuity. Which Social Security strategy best achieves this?
Answer: Delaying to age 70 to lock in maximum guaranteed lifetime benefit
Delaying Social Security to age 70 increases the monthly benefit by 8% per year after FRA, providing the highest guaranteed lifetime income stream.
In the context of retirement planning, what is 'sequence of returns risk'?
Answer: The danger that poor investment returns early in retirement permanently impair a portfolio due to ongoing withdrawals
Sequence of returns risk occurs when withdrawals combined with early negative returns deplete the portfolio faster than average returns would suggest, leaving less capital to recover.
A married couple wants to ensure the surviving spouse continues to receive retirement income. Which annuity payout option is MOST appropriate?
Answer: Joint and survivor annuity
A joint and survivor annuity continues payments to the surviving spouse after the primary annuitant's death, ensuring lifetime income for both.
Which tax strategy involves recognizing capital gains in years when a retiree's income places them in the 0% capital gains tax bracket?
Answer: Gain harvesting (strategic capital gain recognition)
Gain harvesting deliberately realizes capital gains when taxable income falls within the 0% capital gains bracket (e.g., 10%–12% ordinary income bracket for 2024), resetting the cost basis tax-free.
What is the primary purpose of a 'longevity annuity' (Qualifying Longevity Annuity Contract, or QLAC) held inside an IRA?
Answer: To defer income payments to advanced age (up to 85) while reducing RMDs on the QLAC premium
A QLAC allows up to $200,000 of IRA assets to be used to purchase an annuity starting at up to age 85, and those funds are excluded from RMD calculations until payments begin.