Rhode Island Life Insurance Practice Exam

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Prepare for the Rhode Island Life Insurance Exam with comprehensive quizzes. Utilize flashcards and multiple choice questions, each equipped with hints and detailed explanations to ensure you're well-prepared for your certification!

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How long does an individual have to rollover funds from an IRA or qualified plan?

90 days
60 days
30 days
120 days

The correct answer is: 60 days

When an individual receives funds from an IRA or a qualified retirement plan and wishes to avoid taxes and penalties, they are typically allowed a strict time frame to complete a rollover. The correct duration for this process is 60 days. This 60-day window starts from the date the individual receives the distribution. If the funds are not rolled over into another eligible retirement account within this period, the distribution may be subject to income tax and possibly early withdrawal penalties, depending on the individual's age and circumstances. The Internal Revenue Service provides this provision to encourage individuals to reinvest their retirement savings rather than cashing out, ensuring that the money remains in a retirement account and continues to grow tax-deferred. Understanding this 60-day rollover rule is crucial for individuals managing their retirement accounts to maintain their tax-advantaged status and avoid unnecessary financial penalties.