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Certified IRA Services Professional Flashcards

7 cards from real IRA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Certified IRA Services Professional flashcards as text

  1. A SEP-IRA employer contribution for a self-employed individual is limited to what percentage of net self-employment income (after the deduction)?

    Answer: 20%

    Self-employed individuals can contribute up to 20% of net self-employment income (which equals 25% of compensation after the SE deduction adjustment).

  2. Which IRA type requires the employer to match employee contributions dollar-for-dollar up to 3% of compensation, or make a 2% non-elective contribution?

    Answer: SIMPLE IRA

    SIMPLE IRA rules require the employer to either match contributions up to 3% of compensation or contribute 2% non-electively for all eligible employees.

  3. What happens if an excess IRA contribution is not corrected by the tax-filing deadline (including extensions)?

    Answer: A 6% excise tax applies each year the excess remains

    Uncorrected excess contributions are subject to a 6% excise tax annually until the excess is removed or absorbed by a future year's contribution room.

  4. Under SECURE 2.0, which new rule allows Roth treatment inside SIMPLE and SEP-IRAs?

    Answer: Optional Roth elective deferrals for SIMPLE IRAs and Roth SEP contributions

    SECURE 2.0 allows SIMPLE IRAs to offer Roth elective deferrals and SEP-IRAs to accept Roth contributions, effective 2023.

  5. An IRA owner designates a trust as beneficiary. What must the trust satisfy to allow 'look-through' treatment for distribution purposes?

    Answer: The trust must be irrevocable, have identifiable beneficiaries, and provide a copy to the custodian by October 31 of the year after death

    For look-through treatment, the trust must be valid, irrevocable at death, have identifiable beneficiaries, and documentation must be provided to the custodian by October 31 of the year following the IRA owner's death.

  6. Which IRS form must be filed to report nondeductible Traditional IRA contributions and track basis?

    Answer: Form 8606

    Form 8606 is required to report nondeductible IRA contributions, track basis, and calculate the taxable portion of distributions.

  7. What is the two-year rule that applies specifically to SIMPLE IRAs?

    Answer: Rollovers to a non-SIMPLE IRA are prohibited during the first two years of participation

    During the first two years of SIMPLE IRA participation, funds may only be rolled over to another SIMPLE IRA to avoid a 25% early withdrawal penalty.