Required Minimum Distribution

The age that currently triggers required minimum distributions from a traditional IRA is:

1. A.65Age 65 is the Medicare eligibility age and a common retirement milestone, which is why it feels like a natural trigger. RMDs are a tax rule with their own threshold and are not tied to retirement or Medicare.
2. B.70This is close to the historical rule, which used age 70 1/2 before Congress raised the threshold. Current law sets the starting age later, so answering from the older rule gets it wrong.
3. C.73Correct - the RMD age is 73.
4. D.59 and a halfAge 59 1/2 is the age at which withdrawals become penalty-free, which is when distributions may begin, not when they must. The RMD rule sets the deadline at the other end of that window.

Why: Under current law the triggering age is 73. The first distribution is not due immediately at the birthday — it must be taken by April 1 of the year following the year the owner turns 73, and every later year's distribution is due by December 31.

At what age must the owner of a traditional IRA generally begin taking required minimum distributions?

1. A.70 and a halfThat was the old RMD age before the rules were changed; it is no longer current.
2. B.65A common guess drawn from Medicare eligibility; it has no role in IRA distribution rules.
3. C.59 and a halfThat is the age at which the 10 percent early-withdrawal penalty stops applying, not the RMD age.
4. D.73Correct. Required minimum distributions from a traditional IRA generally begin at 73.

Why: Required minimum distributions from a traditional IRA generally must begin at age 73 under current rules.

Amara Sundaram, 34, is in a low tax bracket now and expects a much higher income in retirement; she asks her adviser how a Roth IRA is treated going in and coming out. A Roth IRA offers:

1. A.An upfront deduction and taxed withdrawalsThis describes the traditional deductible IRA, where the tax break comes first and distributions are taxed. The Roth reverses the order: contributions are made with after-tax dollars, and qualified withdrawals come out tax-free.
2. B.Employer matching requiredEmployer matching is a feature of workplace plans such as a 401(k). A Roth IRA is an individual account opened directly with a custodian, with no employer involvement at all.
3. C.Tax-free qualified withdrawals and no lifetime RMDsCorrect - Roth's key advantages.
4. D.Mandatory withdrawals at 59 and a halfAge 59 1/2 is when qualified withdrawals may begin without penalty, not when any withdrawal is required. A Roth IRA has no required minimum distributions during the owner's lifetime, which is one of its planning advantages.

Why: A Roth IRA provides tax-free qualified withdrawals and has no required minimum distributions during the owner's lifetime.

Which statement about a Roth IRA is correct?

1. A.Earnings are always taxed when withdrawnQualified Roth withdrawals, including earnings, are tax-free.
2. B.Required minimum distributions begin at age 73 for the ownerRoth IRAs have no RMDs during the owner's lifetime.
3. C.Contributions are tax-deductible and withdrawals are taxedThat describes a traditional deductible IRA, not a Roth.
4. D.Contributions are after-tax and qualified withdrawals are tax-freeCorrect — that is the defining Roth IRA tax treatment.

Why: Roth IRA contributions are made with after-tax dollars, and qualified distributions (generally after age 59 and a half and a five-year holding period) are entirely tax-free. Roth owners are not subject to required minimum distributions during their lifetime.