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Emily CFP Cards > Retirement and Income Planning > Flashcards

Retirement and Income Planning Flashcards

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1
Q

Are 457 plans aggregated with deferrals into other plans?

A

No

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2
Q

What is the catch-up contribution for 457 plans (over age 50)?

A

$7,500

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3
Q

What is the catch-up contribution for 403(b) plans (over age 50)?

A

$7,500

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4
Q

A “fully insured” traditional DB plan is funded exclusively by:

A

cash value life insurance or annuity contracts

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5
Q

What is the shortcut for 25% SE for contributing to a retirement plan?

A

18.59%

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6
Q

Are employer contributions mandatory for a SEP IRA?

A

no

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7
Q

What is the only retirement plan that does not consider “active participation” for IRA deductibility purposes?

A

457 plans

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8
Q

In a DB plan, what constitutes “active participation” for IRA deductibility purposes?

A

simply being eligible

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9
Q

Can you have a SIMPLE IRA if you have another retirement plan established already?

A

no

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10
Q

How many employees are required for an employer to be eligible to establish a SIMPLE IRA?

A

no more than 100 employees

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11
Q

Are employer contributions mandatory for a SIMPLE IRA?

A

yes

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12
Q

What are the minimum employee coverage requirements for a SIMPLE IRA?

A

all employees who:
- have compensation of at least $5,000 in any 2 prior years
- are expected to earn at least $5,000 in the current year

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13
Q

What are the minimum employee coverage requirements for a SEP IRA?

A

all employees who:
- are at least 21 years old
- employed with the company in the 3 of last 5 years
- earns at least $750 in compensation

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14
Q

What is the catch-up contribution amount for a SIMPLE IRA?

A

$3,500

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15
Q

What is the maximum employee deferral amount for a SIMPLE IRA?

A

$16,000

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16
Q

Can an employee defer into a SEP IRA?

A

no

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17
Q

Which qualified plan must use a 3-year cliff vesting schedule?

A

cash balance

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18
Q

All DB plans must have which kind of payout, unless waived?

A

joint and survivor

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19
Q

What is the shortcut percentage for SE tax when the SS wage base is below $168,600?

A

14.13%

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20
Q

What is the % for Medicare tax?

A

2.9%

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21
Q

What is the maximum rate that an SE employer can contribute to a DC plan?

A

25%

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22
Q

In a SIMPLE IRA, withdrawals within 2 years of enrollment are subject to what kind of penalty?

A

25%

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23
Q

What is the maximum contribution that an employer can make to a SEP each year?

A

25% of payroll but no more than $69,000

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24
Q

What is the catch-up contribution limit for a SIMPLE IRA?

A

$3,500

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25
Q

How many traditional rollovers are allowed in a year?

A

1

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26
Q

How many days does a participant have to deposit funds into an IRA or a different employer plan once a traditional rollover has paid?

A

60

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27
Q

How many direct transfer rollovers can a participant make each year?

A

no annual limit

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28
Q

A traditional rollover from a qualified plan requires how much federal income tax to be withheld?

A

20%

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29
Q

In an inherited IRA, the spouse can be treated how?

A

as the owner

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30
Q

If a spouse chooses to be treated as the owner in an inherited IRA, when can they defer RMDs until?

A

age 72

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31
Q

Can a spouse beneficiary of an inherited IRA combine it with their own IRA?

A

yes

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32
Q

For a non-spouse beneficiary of an IRA, how long do they have to withdraw funds from the IRA?

A

10 years

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33
Q

Do Roth IRAs require RMDs, even if inherited?

A

never

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34
Q

If a minor receives an inherited IRA, how long do they have to withdraw the funds?

A

their 10-year clock begins at age of maturity

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35
Q

Who are eligible designated beneficiaries?

A
  • spouse
  • chronically ill person
  • disabled person
  • minor children
  • individuals not more than 10 years younger than the IRA owner
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36
Q

Who can spread distributions over their lifetime from an inherited IRA?

A

eligible designated beneficiaries

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37
Q

Who does the 10-year rule apply to when it comes to inherited IRAs?

A
  • non-spouse beneficiary
  • see-through trusts
  • successor beneficiaries
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38
Q

A non-qualified distribution within 5 years of a Roth conversion may be subject to:

A

a 10% penalty

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39
Q

What is are the special catch-up rules for 401(b) plans?

A
  • available for employees with a minimum 15 years with employer
  • $3,000 catch up per year
  • may be used with the catch-up of $7,500 in the same year
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40
Q

Do Section 403(b) plans require RMDs?

A

yes, age 73

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41
Q

Are Section 403(b) deferrals aggregated with other plans?

A

yes

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42
Q

The monthly retirement benefit at FRA

A

PIA

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43
Q

AIME is based on the ____ best years of indexed earnings

A

35

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44
Q

_____ is used to calculate PIA

A

AIME

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45
Q

OASDI % goes up to what amount?

A

$168,600 (SS limit)

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46
Q

What is the Medicare payroll tax %?

A

1.45%

47
Q

How many SS credits can a person earn in one year?

A

4

48
Q

How many SS credits is considered fully insured?

A

40

49
Q

One quarter of coverage is earned for each $_____ of earned income

A

$1,730

50
Q

What amount of working years does AIME look at?

A

the best 35 years of working income

51
Q

What is the earliest age a worker may claim SS?

A

62

52
Q

Are COLAs applied to permanently reduced SS benefits?

A

yes

53
Q

What is the reduction for the first 36 months of SS taken early?

A

5/9%

54
Q

What is the reduction for the next 24 months (after the first 35 months) of SS taken early?

A

5/12%

55
Q

What is the maximum reduction that a person can face for taking their SS benefits early?

A

30%

56
Q

What is the longest you can delay taking SS benefits?

A

age 70

57
Q

How much does a DRC add per year of not taking SS benefits?

A

8%

58
Q

If a person’s FRA is 67 and they delay SS until 70, what is the maximum % increase in benefits they can receive?

A

24%

59
Q

Does income earned prior to claiming SS benefits count for taxation withholding?

A

no

60
Q

What is the “first year rule” when it comes to earned income and SS benefits?

A

benefits can be paid in any month in which the earned income is less than 1/12th of the applicable yearly limit (1/12th of $22,320 (2024) or 1/12th of $59,520 (2024) in the year of FRA)

61
Q

Claiming benefits while having earned income from age 62 to the year in which full retirement age (FRA) is attained:

A

$1 of Social Security benefits is withheld for every $2 earned in excess of $22,320 (on tax tables)

62
Q

Claiming benefits while having earned income in the year in which full retirement age (FRA) is attained:

A

$1 of Social Security benefits is withheld for every $3 earned in excess of $59,520 (on tax tables)

63
Q

What is the maximum percentage of SS benefits that will be exposed to income tax?

A

85%

64
Q

Is tax-exempt income counted in the taxation of SS benefits?

A

yes

65
Q

What is the inclusion for provisional income for taxation of SS benefits formula?

A

1/2 SS benefits + tax-exempt income + AGI

66
Q

For a single earner, $_______ or less is not exposed to taxation for SS benefits

A

$25,000

67
Q

For MFJ, $____ or less is not exposed to taxation for SS benefits

A

$32,000

68
Q

For MFJ, between $_____ and $______ will be 50% taxable for SS benefits

A

$32,000 and $44,000

69
Q

For MFJ, $______ or more will be taxed at 85% for SS

A

$44,000

70
Q

For Single, between $______ and $______ will be 50% taxable for SS benefits

A

$25,000 and $34,000

71
Q

For Single, $______ or more will be taxed at 85% for SS benefits

A

$34,000

72
Q

If a spouse has dual eligibility, what amount of benefits do you receive?

A

the higher of the 2 - NOT combined

73
Q

For divorced spouses, the spouses must be how old in order to claim?

A

62

74
Q

For divorced spouses to claim on each other, how long must they have been married?

A

10 years

75
Q

For divorced spouses to claim on each other, does the other spouse have to have filed to start receiving benefits in order for the other spouse to receive benefits?

A

no

76
Q

For a current spouse to claim on their spouse, what are the requirements?

A
  • worker must have filed for his/her own benefit
  • must have been married for at least 1 year
  • must still be currently married
77
Q

For you to claim on your divorced spouse’s benefit, can you get married again?

A

no, you must be unmarried

78
Q

Are benefits for a current spouse subject to the maximum family benefit rules?

A

yes

79
Q

Are benefits for a divorced spouse subject to the maximum family benefit rules?

A

no

80
Q

What is the Government Pension Offset for SS benefits?

A

if beneficiary claiming spousal benefit receives a government pension benefit for which Social Security taxes were not paid the Social Security spousal retirement benefit will be reduced by two-thirds of the government pension amount

81
Q

What is the extra Medicare tax %?

A

.9% above $200,000 S/$250,000 MFJ (on tax table)

82
Q

How old do you have to be to file for Medicare?

A

65

83
Q

What is Medicare Part A?

A

hospital

84
Q

Is there a premium for Medicare Part A?

A

no

85
Q

There is a flat deductible that covers days 1-____ for Medicare Part A hospital stays

A

60

86
Q

What is Medicare Part B? Is it required?

A

doctor (non-hospital); not required

87
Q

Is there a premium for Medicare Part B?

A

yes

88
Q

After the deductible is met for Medicare Part B, who pays what?

A

Medicare - 80%
patient - 20%

89
Q

What is the main difference with Medicare Part C and Medicare Part B in terms of premiums?

A

Medicare Part C has much lower premiums than Part B

90
Q

What is the main disadvantage to Medicare Part C?

A

doctors must be in network; uses “gatekeeping” strategy like HMOs

91
Q

What is Medicare Part D?

A

prescription drugs

92
Q

The survivor benefits is ____% of someone’s PIA

A

100%

93
Q

A survivor benefit can begin at what age?

A

60

94
Q

What age can you get remarried if you are a widow and wanting to collect survivor’s benefits?

A

60

95
Q

You can only collect a divorced survivor’s benefit if you were married for at least ___ years

A

10

96
Q

If the survivor is caring for a child of a deceased worker under the age of ___, the child qualifies for a survivor’s benefit

A

16

97
Q

SS pays a lump sum benefit to either the surviving spouse OR the child of the decedent in the amount of:

A

$255

98
Q

Taxpayers who make a QCD must be at least _____ years old on the day of distribution

A

70 1/2

99
Q

A QCD may only be initiated using the ______ transfer method

A

direct

100
Q

What is the maximum $ amount of a QCD that can be made?

A

$105,000

101
Q

The full QCD is reported on Form _____

A

1040 (it will be reported as “zero” with QCD next to the line)

102
Q

NUA applies to ______ held in a qualified plan

A

employer stock

103
Q

Employer basis as part of a lump sum distribution in a NUA situation is taxed how?

A

ordinary income

104
Q

If a spouse receives a QDRO and chooses to NOT roll the money over to an IRA, what are the tax implications?

A

ordinary tax applies, no penalties

105
Q

Does the payor of a QDRO pay tax on the distribution?

A

no

106
Q

Allows the recipient of a grant of restricted stock to pay taxes at the time of the grant based on the value of the stock at the time of the gran

A

Section 83(b)

107
Q

A test that states that a qualified plan must cover at least 70% of the non-highly compensated employees

A

Safe Harbor Test

108
Q

A test that states that a qualified plan must cover a percentage of non-highly compensated employees equal to at least 70% of the percentage of highly compensated employees covered

A

Ratio Percentage Test

109
Q

A qualified plan test that states that the percentage of benefits received by non-highly compensated employees must equal at least 70% of the percentage of benefits received by highly compensated employees

A

Average Benefits Test

110
Q

In either integration method, the maximum increase in benefits produced by the integration formula used cannot exceed:

A

26.25% (3/4 of 1% x 35 years)

111
Q

A qualified plan is considered top-heavy if more than what percentage of accrued benefits or account balances are allocated to key employees?

A

60%

112
Q

The minimum age spousal social security retirement benefits may be claimed is:

A

62

113
Q
A
114
Q

What are the 3 tax-advantaged retirement plans?

A

SIMPLEs, SEPs, and 403(b)s

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