3
practice testMultiple Choice

Practice Test

Question 3 • Advanced Financial Algebra

Haley is nearing retirement and has significant savings in a traditional IRA. They are considering rolling over their savings to another plan to avoid mandatory minimum distributions (RMDs). Which plan should Haley consider to avoid RMDs?

Answer
A
traditional IRA
B
SEP IRA
C
SIMPLE IRA
D
Roth IRA

Explanation

A Roth IRA has no required minimum distributions during the original account owner's lifetime, so Haley could consider rolling over the traditional IRA funds to a Roth IRA. The rollover is generally a taxable conversion, so Haley should consider the tax consequences before proceeding.

AI-written and checked against the verified answer.

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