Retirement account types and the tax treatment of investment income and distributions tested on the Series 65 and 66 exams.
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- How is a Traditional IRA distribution taxed?
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As ordinary income in the year received- Are Roth IRA contributions tax-deductible?
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No, they are made with after-tax dollars- What makes a distribution from a Roth IRA qualified?
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The account has been held at least five tax years and the distribution is made after age 59.5, death, disability, or for a first-time home purchase- What is the maximum employer contribution to a SEP-IRA?
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Up to 25 percent of self-employment income or the annual limit, whichever is less- Can an employee make elective deferrals to a SEP-IRA?
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No, only the employer can make contributions- What is required for an employer to sponsor a SIMPLE IRA?
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The employer must make either a matching contribution (up to 3 percent) or a 2 percent non-elective contribution- What is the employee elective deferral limit for a SIMPLE IRA?
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16,000 in 2024, plus a 3,500 catch-up contribution for employees age 50 and over- In a Solo 401(k), can the self-employed owner contribute in both employee and employer capacities?
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Yes, contributing as both employee (elective deferral) and employer (profit-sharing contribution)- What does a four-year cliff vesting schedule mean?
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An employee receives 0 percent of employer contributions until the end of year four, then vests 100 percent- What is a hardship withdrawal from a 401(k)?
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An early distribution made to meet an immediate and heavy financial need, subject to income tax and potentially the 10 percent early withdrawal penalty- Who sponsors a 403(b) plan?
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Schools, universities, hospitals, and certain non-profit organizations- What type of organization sponsors a 457 plan?
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State and local governmental employers- What is a qualified charitable distribution (QCD)?
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A direct transfer of up to 100,000 from an IRA to a qualified charity that counts toward RMDs and is not taxable- What is the penalty for an IRA withdrawal before age 59.5?
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10 percent of the amount withdrawn, plus ordinary income tax- What is the Rule of 55 exception to early withdrawal penalties?
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An employee who separates from service at age 55 or later can withdraw from that employer plan penalty-free
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