Retirement Savings Practice Test 2025 - Free Retirement Savings Practice Questions and Study Guide

The correct statement regarding 10-year forward averaging eligibility is that only qualified plans can qualify for this averaging method. This means that the averaging method is specifically applicable to plans that meet certain regulatory requirements, such as qualified retirement plans that comply with the Internal Revenue Code. These plans typically include 401(k)s, pension plans, and other tax-advantaged retirement accounts that have been established by employers.

In contrast, other types of retirement accounts, like IRAs or non-qualified plans, do not automatically qualify for this specific averaging method, which is designed primarily for distributions from qualified plans. Therefore, understanding the distinction between qualified and non-qualified plans is crucial for determining the eligibility for 10-year forward averaging.

The other options present inaccurate scenarios regarding the eligibility criteria for this averaging method. For example, the requirement based on birth dates or the assumption that all types of distributions from retirement accounts automatically qualify does not align with the specific regulations governing this averaging method.