ExpertEasy1 markMultiple Choice
CPA · Question 27 · Area 2: Financial Planning
A taxpayer has a traditional 401(k) balance of $2,000,000. They turn 73 in Year 1. The Uniform Lifetime Table factor for age 73 is 26.5. What is the Required Minimum Distribution (RMD) for Year 1?
A taxpayer has a traditional 401(k) balance of $2,000,000. They turn 73 in Year 1. The Uniform Lifetime Table factor for age 73 is 26.5. What is the Required Minimum Distribution (RMD) for Year 1?
Answer options:
A.
$0
B.
$72,993
C.
$75,472
D.
$200,000
How to approach this question
1. Identify Account Balance: $2,000,000 (as of prior year end).<br/>2. Identify Factor: 26.5.<br/>3. Calculate: $2,000,000 / 26.5.<br/>4. Result: $75,471.69 -> Round to $75,472.
Full Answer
C.$75,472✓ Correct
C
RMD = Account Balance / Life Expectancy Factor. $2,000,000 / 26.5 = $75,471.70.
Common mistakes
Multiplying by a percentage instead of dividing by the factor.
Practice the full CPA TCP Practice Exam
68 questions · hints · full answers · grading
More questions from this exam
Q01An individual taxpayer, filing single, exercised 1,000 Incentive Stock Options (ISOs) in Year 1 w...HardQ02A taxpayer has the following income and losses for Year 1:<br/>- Salary: $200,000<br/>- Interest ...HardQ03In Year 1, a taxpayer donates a piece of artwork to a public charity (50% limit organization). Th...HardQ04A taxpayer has $10,000 of investment interest expense in Year 1. They have the following income i...MediumQ05A single taxpayer has the following financial profile for Year 1:<br/>- Wages: $180,000<br/>- Net...Medium