Retirement and education savings
Area 1: Individual Tax Planning (30-40%)
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Topics
- Qualified plan types and contribution limits
- IRA strategies and Roth conversions
- 529 plans and education incentives
Study Frameworks
Retirement Plan Comparison
| Plan | Contribution Limit (2026) | Employer Match | Key Rules |
|---|---|---|---|
| Traditional 401(k) | $24,000 employee + $71,000 total (with employer) | Discretionary; subject to ADP/ACP testing | Pre-tax contributions; RMDs at 73; 10% early withdrawal penalty before 59.5 |
| Roth 401(k) | $24,000 employee (same total limit) | Employer match goes to pre-tax account | After-tax contributions; qualified distributions tax-free; no income limit |
| Traditional IRA | $7,000 ($8,000 if 50+) | N/A | Deductible if no employer plan or below income limits; RMDs at 73 |
| Roth IRA | $7,000 ($8,000 if 50+) | N/A | After-tax; tax-free growth; no RMDs for owner; income phase-out $155K-$170K single (2026) |
| SEP IRA | 25% of compensation, max $71,000 | Employer contributes (must be uniform %) | Employer-only contributions; easy setup; no catch-up contributions |
| SIMPLE IRA | $17,000 employee ($20,500 if 50+) | Required: 2% nonelective or 3% match | For employers with 100 or fewer employees; 25% early withdrawal penalty in first 2 years |