Retirement
What percent of people delay claiming their Social Security benefits until age 70?
3.7% according to 2019 data, will accept 3-4 percent
According to Investopedia, the rate you pay on an additional dollar of income.
What is marginal tax rate?
Are commissions and bonuses taxed at a higher rate than salary?
No, but they are subject to statutory withholding, often depicting less percentage left over compared to salary
What is the difference between HSA contributions via payroll versus deduction via 1040?
FICA Taxes / 7.65%
QDIA
Qualified Default Investment Alternative
What is the maximum percentage of PIA (Primary Insurance Amount) a person can receive by taking advantage of Social Security’s delayed retirement credits?
132% (8% per year for those w/ FRA of 66)
Tommy Taxpayer’s 2019 AGI was $145,000 and 2020 AGI was $165,000 after getting a nice promotion and raise. Unfortunately, Tommy lost his job in early 2021 and expects his 2021 AGI to be under $100,000. With his spouse filing jointly and two young children, what amount of a recovery rebate is Tommy entitled to per the American Rescue Plan Act of 2021?
$5,600, can recognize when filing 2021 taxes since no check would have been sent automatically via use of his 2020 AGI (phased out)
What is the Social Security Wage Base for 2021?
$142,800
If an HSA holder passes away, can their beneficiary use any remaining balance to pay for their own QMEs tax-free?
Only if the beneficiary is a spouse, otherwise it stops being an HSA and is taxable to the beneficiary
IRA
Individual Retirement Arrangement
Dennis Deceased made his first Roth IRA contribution in 2018. He tragically passed away at age 62 in 2021 and left his Roth IRA to his 30-year old daughter. Will there be any income taxable impact for Dennis’ daughter?
Yes, the 5-year rule was not met. While death is an exception to the 10% early withdrawal penalty, she’ll have to treat the growth in the Roth as taxable income (but not the contributions)
This tax system comes with only two tax rates or brackets—26% and 28%.
What is the Alternative Minimum Tax?
Pedro Performer has Restricted Stock Units which were granted in 2018 when ACME Inc was trading at $45 per share. Pedro has shares vesting today when the stock price is $35. Are his units/shares “in the money?”
Yes, any income received is “in the money”
Geraldine Go-Getter is starting her career as a 23-year old incoming sales associate at a large tech firm. She is still covered by her parents’ HDHP and has no other non-HDHP health coverage. How much can Geraldine save in her HSA for 2021?
$7,200—she has FAMILY coverage but is being treated as a taxpayer separate from her parents
PITI
Principal, Interest, Taxes & Insurance
Reggie Retirement has two employer-sponsored 401(k) plans, two Rollover IRAs and one Roth IRA. Reggie is retired and turns 72 this year. How many RMDs is Reggie REQUIRED to take this year?
At least 3 – one for each employer-sponsored plan, IRAs are treated as aggregate, Roth IRAs are not subject (technically can delay until 4/1 of next year, but then would need two RMDs)
Wendy Worker and Adam At-home file jointly with $150,000 AGI. Wendy has a 401(k) plan through her employer, but Adam does not have W2 employment. How much can they deduct from their combined $12,000 Traditional IRA contributions for 2021?
$6,000, Adam can have his spousal contribution since he is a non-active participant with AGI under 198k
In a section 423 Employee Stock Purchase Plan, what is the dollar limit for stock purchased in a calendar year?
$25,000
Larry Latebloomer is single with no dependents and starting a new job with health coverage beginning on 11/1. He elected the HDHP but had non-HDHP coverage earlier in the year. How much can Larry contribute to his HSA in 2021?
$600 via pro-ration method, or $3,600 based on last-month rule
PBGC
Pension Benefit Guaranty Corporation
At what 2019 AGI is a MFJ person’s 2021 Medicare Part B premium subject to their first increase/surcharge?
$176,000, goes from $148.50 to $207.90
Tammy Tax-filer made her first Roth IRA contribution on April 1st, 2021 in an amount of $12,000 to represent both a 2021 and 2020 contribution. What is the first date in which Tammy meets the 5-year rule for a Roth qualified distribution?
January 1st, 2025
What is the coverage level for employer-paid life insurance before the employee needs to recognize imputed income on any premiums paid?
$50,000
Amy Ambition is starting her career as a 23-year old incoming analyst at an investment management firm. Her parents have a traditional PPO-style health plan with a Flexible Spending Account, but Amy is NOT covered under their PPO plan because Amy has elected to use the HDHP through her employer. How much can Amy save in her HSA for 2021?
A: $0, she is technically covered by her parents FSA
ILIT
Irrevocable Life Insurance Trust