What's tested on the Series 65 Retirement Plans section?

A is correct. Traditional IRA contributions are typically made with pre-tax dollars (deductible contributions), providing an immediate tax deduction, while Roth IRA contributions are made with after-tax dollars (no deduction now) but offer tax-free qualified distributions later.

B (Higher contribution limits) is incorrect because Traditional and Roth IRAs have the same contribution limits ($7,000 in 2024, or $8,000 if age 50 or older). C (Employment requirement) is incorrect because both account types generally require earned income to make contributions. D (Penalty-free withdrawals) is incorrect because Traditional IRAs generally impose a 10% penalty for early withdrawals before age 59½, while Roth IRAs allow tax-free and penalty-free withdrawal of contributions (but not earnings) at any time.

D is correct. Under the SECURE Act 2.0, individuals born between 1951 and 1959 must begin taking RMDs at age 73. The first RMD must be taken by April 1 of the year following the year they turn 73.

A (Age 70½) is incorrect because this was the old rule before the SECURE Act of 2019. B (Age 75) is incorrect because this RMD age applies only to individuals born in 1960 or later, starting in 2033. C (Age 72) is incorrect because this applied to individuals born in 1950 or earlier under the original SECURE Act.

C is correct. A SEP IRA (Simplified Employee Pension) is funded exclusively by employer contributions. Employees cannot make their own contributions to a SEP IRA, making it a straightforward retirement plan for self-employed individuals and small businesses.

A (401(k)) is incorrect because 401(k) plans allow both employee salary deferrals and employer contributions (such as matching or profit-sharing). B (SIMPLE IRA) is incorrect because it specifically requires both employee and employer contributions. D (403(b)) is incorrect because these tax-sheltered annuity plans allow employee salary deferrals plus optional employer contributions, similar to 401(k) plans.

B is correct. For 2024, the maximum employee salary deferral to a 401(k) is $23,000 for participants under age 50. Since this participant is 45 years old, they do not yet qualify for catch-up contributions.

A ($16,000) is incorrect because this is the SIMPLE IRA employee contribution limit for 2024. C ($30,500) is incorrect because this is the total 401(k) limit including the $7,500 catch-up contribution for participants age 50 and older. D ($7,000) is incorrect because this is the 2024 IRA contribution limit, not the 401(k) limit.

D is correct. Purchase of a new vehicle is NOT an exception to the 10% early withdrawal penalty. While vehicle purchases may be necessary, they are not among the IRS-approved penalty exceptions for IRA distributions before age 59½.

A (First-time home purchase) is a valid exception allowing up to $10,000 penalty-free withdrawal. B (Qualified higher education expenses) is a valid exception for IRA withdrawals to pay for college or graduate school expenses. C (Medical expenses exceeding 7.5% of AGI) is a valid exception for unreimbursed medical expenses above this threshold.

C is correct. In a defined benefit plan (traditional pension), the employer promises a specific benefit at retirement based on a formula (typically considering salary and years of service). The employer bears all investment risk because they must fund the plan sufficiently to meet these promised benefits, regardless of investment performance.

A (Defined contribution), B (401(k)), and D (Profit-sharing) are all defined contribution plans where the employee bears the investment risk. In these plans, contributions are defined but the ultimate benefit depends on investment performance. If the account performs poorly, the employee receives less at retirement, not the employer.

A is correct. SEP IRA contributions are limited to the lesser of 25% of compensation or $69,000 (2024 limit). For this client earning $100,000, the calculation is $100,000 × 25% = $25,000. The age 50+ catch-up contribution does not apply to SEP IRAs.

B ($7,000) is incorrect because this is the standard IRA contribution limit for 2024. C ($8,000) is incorrect because this is the IRA limit with the age 50+ catch-up, but SEP IRAs don't have separate catch-up provisions. D ($69,000) is incorrect because while this is the maximum SEP IRA limit, it's not applicable here since 25% of $100,000 is only $25,000.

C is correct. One of the key advantages of Roth IRAs is that they do not require RMDs during the account owner's lifetime. This allows the funds to continue growing tax-free for as long as the owner wishes, making Roth IRAs excellent wealth transfer vehicles.

A (Age 73) is incorrect because this is the RMD age for Traditional IRAs for those born 1951-1959, but it doesn't apply to Roth IRAs. B (Age 75) is incorrect because this is the future RMD age for Traditional IRAs for those born 1960 or later, but Roth IRAs never require lifetime RMDs. D (Age 59½) is incorrect because while this is the age for penalty-free withdrawals (along with the 5-year rule), it's not an RMD trigger for Roth IRAs.

B is correct. SIMPLE IRAs (Savings Incentive Match Plan for Employees) are designed for small employers with 100 or fewer employees who earned $5,000 or more during the preceding year. These plans offer a simplified retirement option with lower administrative costs than traditional 401(k) plans.

A (500 or fewer) is incorrect because employers with more than 100 eligible employees cannot establish SIMPLE IRAs. C (50 or fewer) is incorrect because this might confuse SIMPLE IRA rules with other small business retirement plan thresholds. D (10 or fewer) is incorrect because it's too restrictive. SIMPLE IRAs can be used by employers with up to 100 employees.

C is correct. When an IRA rollover is completed within 60 days, it is tax-free and penalty-free. The funds are treated as a continuation of the retirement account, not as a distribution. However, this type of rollover can only be done once per 12-month period for IRAs.

A (Taxable as ordinary income) is incorrect because properly completed rollovers are not taxable events. B (Tax-free but 10% penalty) is incorrect because no penalty applies to properly executed rollovers. D (Only earnings taxable) is incorrect because no portion is taxable when the rollover is completed within the 60-day window.