Strategy Intermediate:
Avoiding Taxes at Retirement
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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1.
Distributions you receive from ordinary qualified retirement and IRA accounts are taxed at what rate upon withdrawal?
Choose wisely. There is only one correct answer.
Your regular income tax rate
A special rate for retirees
The capital gains rate
Your regular income tax rate. Distributions are taxed at your regular income tax rate -- a fact that may call for some tax planning on your part.
2.
The amount of your minimum required retirement distribution is based on your _______.
Choose wisely. There is only one correct answer.
Overall income
Life expectancy
Income average
Life expectancy. The amount of your minimum distribution is based on your life expectancy as determined by IRS actuarial tables.
3.
Retirement plan balances left to a spouse are subject to a maximum 75 percent estate tax.
Choose wisely. There is only one correct answer.
True
False
False. Retirement plan balances left to a spouse qualify for a tax-free transfer.
4.
The tax penalty for early withdrawal from your IRA account is 10 percent.
Choose wisely. There is only one correct answer.
True
False
True. This penalty is meant to discourage you from taking out your money before the allowed time.
5.
At what age will your earned income stop reducing your Social Security benefits?
Choose wisely. There is only one correct answer.
Age 65
Your full retirement age
Age 67
Age 70
Your full retirement age. Once you reach this age, your earned income will stop reducing your benefits.
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DONE