RMD Quiz – How Well Do You Know the Rules?

Monday, November 27, 2017
By Sarah Brenner, JD.
IRA Analyst
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If you have an IRA, you should realize that what goes in must come out. In other words, your tax deferral will not last forever. Eventually, Uncle Sam will want his share. When you reach retirement age, required minimum distributions (RMDs) will kick in. Are you prepared? Take our RMD quiz and see how well you understand the basic RMD rules.

Meet Laura, a baby boomer, who is about to embark on her retirement years. This past year has been a great year for Laura. She retired from her job and she also just celebrated her 70th birthday on October 1, 2017. She has a traditional IRA and a 401(k) plan. Her older sister, JoAnn is the beneficiary of both. Can you answer the following five questions about Laura and her RMD? The correct answers can be found at the bottom of the page.

 

1.     What is the deadline for Laura to take her first RMD from her traditional IRA?

A.     December 31, 2017

B.     December 31, 2018

C.     April 1, 2018

D.     April 1, 2019

 

2.     To calculate her first IRA RMD, Laura must use which IRS life expectancy table?

A.     The Single Life Expectancy Table

B.     The Uniform Life Expectancy Table

C.     The Joint Life Expectancy Table

 

3.     To calculate her first IRA RMD, Laura must use which IRA balance?

A.     December 31, 2016

B.     December 31, 2017

C.     December 31, 2018

 

4.     Laura can take her RMD for her IRA from either her IRA or her 401(k).

A.     True

B.     False

 

5.     If Laura fails to take her IRA RMD by the deadline, she will be subject to what penalty?

A.     A 6% penalty

B.     A 10% penalty

C.     A 25% penalty

D.     A 50% penalty

 

 

 

 

 

 

Answers: 1. D, 2. B, 3. B, 4. B, 5. D

 
 

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