Retirement Plans on the Series 65 Exam
The Series 65 exam tests your knowledge of retirement plan types, contribution limits, tax treatment, distribution rules, and ERISA fiduciary duty requirements.
- 3 questions on retirement plan types (IRAs, 401(k)s, etc.)
- 3 questions on ERISA issues and fiduciary duty
- Topics updated to reflect SECURE 2.0 changes
As an investment adviser representative, you will frequently help clients with retirement planning. The Series 65 tests your understanding of the different types of retirement accounts, their tax implications, and your responsibilities when advising on retirement assets. This content falls under Section IV of the exam: Laws, Regulations, and Guidelines.
The exam was updated in June 2023 to align with SECURE Act 2.0, which changed RMD ages, catch-up contribution rules, and other important provisions. The IRS Notice 2024-2 provides detailed guidance on these changes. Make sure your study materials cover them.
2026 Retirement Account Contribution Limits
The IRS announces contribution limits annually. These are the official 2026 limits from IRS Notice 2025-67:
Individual Retirement Accounts (IRAs)
| Account Type | Under Age 50 | Age 50+ |
|---|---|---|
| Traditional IRA | $7,500 | $8,600 |
| Roth IRA | $7,500 | $8,600 |
| SEP IRA (employer contribution) | Lesser of 25% of compensation or $72,000 | |
| SIMPLE IRA | $17,600 | $21,350 |
Contribution limits are frequently tested. Practice with:
- Retirement Plans Questions (3 questions)
These questions test 2026 limits for Traditional IRAs, Roth IRAs, and employer plans.
The $7,500 limit is the combined total for all Traditional and Roth IRA contributions. You cannot contribute $7,500 to each.
Employer-Sponsored Plans
| Plan Type | Under Age 50 | Age 50-59 / 64+ | Age 60-63 (Super Catch-Up) |
|---|---|---|---|
| 401(k) / 403(b) / 457(b) | $24,500 | $32,500 | $35,750 |
| Total (employee + employer) | $72,000 (or 100% of compensation if less) | ||
Starting in 2025, participants ages 60-63 can make enhanced catch-up contributions of up to $11,250 instead of the standard $8,000. This “super catch-up” provision is new and may be tested.
These contribution limits have multiple age thresholds and catch-up variations that are frequently tested on the Series 65. Memorizing $7,500 for IRAs (under 50), $8,600 (over 50), $24,500 for 401(k)s, and the new super catch-up amounts requires systematic retention. Our flashcard strategies guide explains how to use FSRS-powered spaced repetition to master these numeric limits efficiently. Review at optimal intervals right before you would forget, ensuring you can instantly recall the correct limits for any age group on exam day.
Traditional vs. Roth IRAs
Understanding the differences between Traditional and Roth IRAs is essential for both the exam and advising clients. The key distinction is when taxes are paid.
Tax Treatment Comparison
| Feature | Traditional IRA | Roth IRA |
|---|---|---|
| Contributions | May be tax-deductible | Never deductible (after-tax) |
| Growth | Tax-deferred | Tax-free |
| Qualified Distributions | Taxed as ordinary income | Tax-free |
| RMDs | Required at age 73 | None during owner’s lifetime |
| Income Limits (Contributions) | None | Yes (see below) |
Roth IRA Income Limits (2026)
Unlike Traditional IRAs, Roth IRAs have income limits that determine eligibility to contribute:
| Filing Status | Phase-Out Range | Full Contribution If Below |
|---|---|---|
| Single / Head of Household | $153,000 - $168,000 | $153,000 |
| Married Filing Jointly | $242,000 - $252,000 | $242,000 |
Income phase-out ranges are tax-driven scenarios. Practice with our tax considerations questions.
Traditional IRA Deduction Limits
Anyone can contribute to a Traditional IRA regardless of income, but the deductibility depends on whether you or your spouse is covered by an employer retirement plan:
- Not covered by employer plan: Full deduction regardless of income
- Covered by employer plan (Single): Deduction phases out $81,000 - $91,000
- Covered by employer plan (MFJ): Deduction phases out $129,000 - $149,000
- Not covered, but spouse is covered: Deduction phases out $242,000 - $252,000
Traditional IRAs generally benefit clients who expect to be in a lower tax bracket in retirement. Roth IRAs benefit those who expect higher future taxes or want flexibility since there are no RMDs. For exam questions, focus on the client’s current vs. Expected future tax situation.
Deduction phase-outs create complex scenarios. Test your understanding with retirement plans questions.
Traditional vs. Roth questions are heavily tested on the Series 65, and the exam frequently presents scenarios where tax considerations conflict with other client factors. Many candidates miss these questions by forgetting that Roth IRAs have income limits while Traditional IRAs do not, or by confusing deductibility limits with contribution limits. Our common mistakes guide identifies the top exam failure patterns for retirement plan questions, including the specific IRA and 401(k) traps that cause well-prepared candidates to select unsuitable recommendations despite understanding the underlying concepts.
Master Retirement Plan Rules
Traditional vs. Roth, contribution limits, RMD ages, early withdrawal penalties: CertFuel tracks your accuracy on each retirement plan type separately. Our Smart Study algorithm knows whether you struggle with IRA income limits, 401(k) vesting rules, or ERISA fiduciary requirements.
Access Free BetaEmployer-Sponsored Retirement Plans
The Series 65 tests several types of employer-sponsored plans. Know the key differences between qualified and non-qualified plans.
Qualified Plans
Qualified plans meet IRS requirements under IRC Section 401(a) and receive favorable tax treatment:
401(k) Plans
- Employee contributions via salary deferral
- Employer may match contributions
- Vesting schedules may apply to employer contributions
- Available to for-profit companies
403(b) Plans
- For public schools and tax-exempt organizations - Similar structure to 401(k) - Same contribution limits as 401(k) - Also called Tax-Sheltered Annuity (TSA)
457(b) Plans
- For state/local government and some non-profits - No 10% early withdrawal penalty - Can contribute to both 457(b) and 401(k)/403(b) - Special catch-up in final 3 years before retirement age
Defined Benefit Plans (Pensions)
- Employer bears investment risk
- Benefits based on salary and years of service
- Less common in private sector today
- PBGC insurance protects benefits
401(k), 403(b), 457(b), and pension plans each have unique characteristics:
- Retirement Plans Questions (3 questions)
Practice matching plan types to client situations and employer types.
Non-Qualified Plans
Non-qualified plans do not meet IRC Section 401(a) requirements. They are typically used for executive compensation:
- Deferred Compensation Plans: Allow executives to defer salary beyond qualified plan limits
- Executive Bonus Plans: Employer pays premiums on life insurance for key employees
- Split-Dollar Plans: Employer and employee share costs and benefits of life insurance
Qualified plan assets are protected from creditors under ERISA. Non-qualified plan assets generally are not, as they remain general assets of the employer until distributed. Non-qualified plan creditor protection issues connect to estate planning questions.
ERISA and Fiduciary Duty
The Employee Retirement Income Security Act of 1974 (ERISA) sets minimum standards for private sector retirement plans. Understanding ERISA is critical because investment advisers often serve as fiduciaries to retirement plans.
Who Is a Fiduciary Under ERISA?
ERISA uses a functional test to determine fiduciary status. You are a fiduciary if you:
- Exercise discretionary authority or control over plan management
- Exercise authority or control over plan assets
- Provide investment advice for a fee
- Have discretionary responsibility for plan administration
Core Fiduciary Duties
ERISA fiduciaries must adhere to four primary duties:
1. Duty of Loyalty
Act solely in the interest of plan participants and beneficiaries. This is the “exclusive benefit rule.”
2. Duty of Prudence
Act with the care, skill, prudence, and diligence of a prudent expert. Get help from competent sources when needed.
3. Duty to Diversify
Diversify plan investments to minimize the risk of large losses, unless clearly imprudent to do so.
4. Follow Plan Documents
Administer the plan in accordance with the plan documents (unless they conflict with ERISA).
The four ERISA duties are heavily tested on the Series 65:
- Retirement Plans Questions (3 questions)
These questions focus on fiduciary obligations for plan sponsors and advisers.
Prohibited Transactions
ERISA Section 406 prohibits certain transactions between the plan and “parties in interest” (fiduciaries, service providers, employers, unions, etc.):
- Sales, exchanges, or leasing of property between plan and party in interest
- Lending money or extending credit between plan and party in interest
- Furnishing goods, services, or facilities between plan and party in interest
- Transferring plan assets to, or for use by, a party in interest
- Fiduciary dealing with plan assets for their own interest (self-dealing)
- Receiving kickbacks from any party in a transaction involving plan assets
Under ERISA Section 404(c), plan fiduciaries may be relieved of liability for investment losses when participants exercise control over their own accounts and the plan offers a broad range of investment options with adequate disclosure. Practice identifying prohibited transactions with our retirement plans questions.
The four ERISA fiduciary duties (loyalty, prudence, diversification, follow plan documents) and the six categories of prohibited transactions are frequently tested and easily confused. ERISA questions often hinge on distinguishing which duty applies in a given scenario or identifying subtle prohibited transaction violations. Our flashcard strategies guide provides techniques for memorizing these ERISA requirements using FSRS algorithms, ensuring you can instantly recall all four duties, identify prohibited transactions, and understand when 404(c) protection applies in exam scenarios.
Required Minimum Distributions (RMDs)
The IRS requires account owners to begin taking distributions from most retirement accounts starting at a specific age. These are called Required Minimum Distributions (RMDs).
RMD Starting Ages
| Birth Year | RMD Starting Age |
|---|---|
| 1950 or earlier | 70½ (already started) |
| 1951 - 1959 | 73 |
| 1960 or later | 75 (starting 2033) |
Key RMD Rules
- First RMD deadline: April 1 of the year following the year you turn 73 (but taking two RMDs in one year may increase taxes)
- Subsequent RMDs: December 31 of each year
- Calculation: Prior year-end balance divided by IRS life expectancy factor
- Still working exception: If still employed and not a 5% owner, can delay employer plan RMDs until retirement
Accounts Subject to RMDs
| Account Type | Subject to RMDs? |
|---|---|
| Traditional IRA | Yes |
| SEP IRA | Yes |
| SIMPLE IRA | Yes |
| 401(k) / 403(b) / 457(b) | Yes |
| Roth IRA | No (lifetime) |
| Roth 401(k) / 403(b) | No (SECURE 2.0 change) |
Taxpayers age 70½ or older can donate up to $108,000 (2025 limit) directly from an IRA to charity. The QCD counts toward the RMD but is not included in taxable income. This is a valuable strategy for charitably inclined clients.
QCD is a tax strategy for clients over 70½. Test your understanding with tax considerations questions.
Penalty for Missing RMDs
Missing an RMD results in an excise tax on the amount not distributed:
- 25% penalty on the shortfall (reduced from previous 50%)
- 10% penalty if corrected within 2 years
- IRS may waive the penalty for reasonable cause
Early Withdrawal Penalties and Exceptions
Distributions taken before age 59½ are generally subject to a 10% early withdrawal penalty in addition to ordinary income tax. However, there are numerous exceptions.
Exceptions for Both IRAs and Employer Plans
- Death: Distributions to beneficiaries after owner’s death
- Disability: Total and permanent disability
- Substantially Equal Periodic Payments (SEPP/72t): Must continue for 5 years or until age 59½, whichever is longer
- Medical expenses: Unreimbursed medical expenses exceeding 7.5% of AGI
- IRS levy: To satisfy an IRS levy against the account
- Qualified disaster distributions: Up to $22,000 per disaster
- Emergency personal expenses: Up to $1,000 per year (SECURE 2.0)
Exceptions for IRAs Only
- First-time home purchase: Up to $10,000 lifetime ($20,000 for married couple)
- Higher education expenses: Tuition, fees, books, supplies for self, spouse, children, or grandchildren
- Health insurance premiums: If unemployed for 12+ weeks
- Birth or adoption: Up to $5,000 per child
Exceptions for Employer Plans Only
- Separation from service at age 55+: Must be in year of separation or later (age 50 for public safety employees)
- Qualified Domestic Relations Order (QDRO): Distributions to alternate payee under divorce decree
- Plan loans: Not treated as distributions if repaid properly
Governmental 457(b) plans are not subject to the 10% early withdrawal penalty at any age. However, distributions are still taxed as ordinary income. This is frequently tested on the Series 65.
QDRO and inheritance exceptions connect to estate planning questions.
Series 65 Exam Tips: Retirement Plans
Here are the most commonly tested concepts and how to approach retirement plan questions:
High-Priority Topics
Traditional vs. Roth tax treatment
Know when contributions are deductible and when distributions are taxable
ERISA fiduciary duties
Memorize the four core duties (loyalty, prudence, diversification, follow plan documents)
RMD age
Currently 73, increasing to 75 in 2033
Early withdrawal exceptions
Know which apply to IRAs only vs. Employer plans only
457(b) advantage
No 10% early withdrawal penalty
Common Exam Traps
- Combined IRA limits: The $7,500 limit is combined for all IRAs, not per account
- Roth income limits: Apply to contributions, not conversions
- First-time homebuyer: IRA exception is $10,000 lifetime, not annual
- SEPP timing: Must continue for 5 years OR until age 59½, whichever is longer
- 404(c) protection: Reduces fiduciary liability but does not eliminate all responsibility
Create flashcards comparing similar concepts (Traditional vs. Roth, qualified vs. Non-qualified plans, IRA vs. Employer plan exceptions). The exam often tests distinctions between similar options.
Retirement accounts appear in 3 questions per exam. Practice all scenarios:
- Retirement Plans Questions (3 questions)
- Tax Considerations Questions (4 questions)
- Estate Planning Questions (2 questions)
These 9 questions cover contribution limits, ERISA duties, RMD calculations, and beneficiary rules.
Retirement plan questions represent approximately 6 questions (5% of your exam). This is a manageable but important portion requiring both numeric accuracy and conceptual understanding. Our study schedule guide shows how to systematically prepare for retirement plan questions while balancing the other three exam sections, ensuring you can quickly recall contribution limits, distinguish Traditional vs. Roth scenarios, and apply ERISA fiduciary duties without over-investing time in this single topic area.
For comprehensive exam preparation including retirement plan practice questions, explore our study guides or see how long you should study based on your background.