📏CPA EXAM PREP

Retirement, Education and Personal Finan

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Question

How does 529 front-loading avoid gift tax?

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Answer

It uses five years of annual exclusions at once.

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Question

When is a Traditional IRA contribution deductible?

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Answer

When MAGI and active-participant rules allow it.

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Question

Why do nondeductible Traditional IRA contributions matter later?

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Answer

They create basis tracked on Form 8606.

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Question

Why are Traditional IRA distributions partly taxable after nondeductible contributions?

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Answer

The basis portion is returned tax-free.

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