Test Questions

Question 1

Does satisfying ERISA 404c mean you are diversified as a fiduciary?

Answer 1

YES, so not liable

Question 2

Who pays the copay?

Answer 2

Insured does

Question 3

Max 2 parents can fund a 529?

Answer 3

$180k

Question 4

Can FSA funds be stopped throughout the year?

Answer 4

NO

Question 5

What happens to unused FSA funds?

Answer 5

They are forfeited

Question 6

How much of personal property is covered with HO policies?

Answer 6

Usually a small amount, around $1,200.

Question 7

What to ask client if they are unhappy?

Answer 7

Questions about what is bothering them

Question 8

How to calc amort on Zeros?

Answer 8

Same as house for period

Question 9

What is a good option for beneficiary of an IRA?

Answer 9

Spouse, they get additional options

Question 10

Are gifts under annual exclusion reportable as gross gifts?

Answer 10

Yes, then exclusion kicks in. If directly to hospital or school then not included. If gifting from IRA before 70-1/2 that is also reported as a gift even if to charity.

Question 11

Sunk cost fallacy

Answer 11

Person is reluctant to abandon a strategy because they are heavily invested

Question 12

What amount of gift value require appraisal?

Answer 12

More than $5,000

Question 13

What is marketability based on?

Answer 13

Number of shares traded

Question 14

How much can each spouse contribute to a UTMA?

Answer 14

Each spouse can contribute $18k

Question 15

What is a risk-free premium?

Answer 15

It is the market premium.

Question 16

Is it good to educate clients?

Answer 16

Yes

Question 17

Do NQDC plans have defined benefit or defined contribution structures?

Answer 17

YES

Question 18

What form of business allows for business continuity?

Answer 18

C Corp

Question 19

Are 457s available for rank and file employees?

Answer 19

NO

Question 20

Can you have a profit sharing contribution if you don’t have profits?

Answer 20

NO

Question 21

Calculating amount that the insured will pay in accident

Answer 21

$640/720 = 0.8889 - 1 = .111 or 11.12%
$102,500 - $2,500 = $100,000
$100,000 * 11.12% = 11,120
$11,120 + $2,500 = $13,620 which is how much insured will pay

I guess they take off the deductible first? Either way if you do it normal the closest answer is that one.

Question 22

Client, age 56, retired from a company 3 years ago and took $500k of employer stock with in-kind distribution to a brokerage account recently. Basis is $100k, what is the tax if he is in the 35% tax bracket?

Answer 22

$100k * 35% = $35,000 (tax on basis)
$100k * 10% = $10,000 (penalty because he is younger than 59-1/2 and took a distribution but he retired BEFORE 55)

Question 23

When should you give a recommendation on a client investment portfolio?

Answer 23

First analyze and THEN give a recommendation at your next client meeting.

Question 24

When does Medicare pay when other insurance is involved?

Answer 24

Second

Question 25

Are cars limited under 1245 property for the section 179 deduction?

Answer 25

Yes! Limited to around $12k Business assets like machinery equipment fully qualify for the 179 deduction.

Question 26

What does the nonforfeiture option under LTC allow for the client?

Answer 26

Allows them to receive some benefits from the policy.

Question 27

Can you combine inherited IRAs?

Answer 27

NO

Question 28

Is "debit" considered equity?

Answer 28

NO

Question 29

When do you have to work until for separation of service at 55?

Answer 29

UNTIL 55

Question 30

When is RBD?

Answer 30

April 1st

Question 31

Does MACRS have mid-quarter conventions?

Answer 31

YES

Question 32

How do DAFs work?

Answer 32

You get a charitable deduction the year you contribute to the fund but you don't actually have to pay it out to the charity until you find one. Contributing to the charity from the DAF is not a deduction but contributing to the DAF is. These have minimal administrative requirements and they are considered public or 60% charities.

Question 33

What is growth rate if they give you ROE and retention ratio?

Answer 33

Growth rate = ROE * Retention ratio

Question 34

Would a deferred annuity work for current income?

Answer 34

NO

Question 35

Do you need to report investigation to the CFP board?

Answer 35

YES absolutely yes. If you know if it is a part then that is a solid answer.

Question 36

What is considered a personal residence if you are renting it?

Answer 36

If you use it MORE than the greater of 14 days or 10% of days rented then it is considered a personal residence and expenses are not deductible.

Question 37

Is depreciation taken on schedule C covered under section 121 on your primary residence?

Answer 37

NO it is recaptured at 25%. The rest of the growth is covered though.

Question 38

Can waiver of premiums count for terminal illness?

Answer 38

Yes

Question 39

What offsets STCL?

Answer 39

Capital gain either ST or LT If there is accumulated STCL then you need to look for something that has capital gain in it, interest will not work.

Question 40

When is the financial planning relationship started?

Answer 40

When goals are discussed. Just opening a investment account and buying does not count as financial planning but goals does.

Question 41

Is 1250 recapture always at 25%?

Answer 41

YES, it is always at 25% even if O.I. levels are lower than that. 1245 recapture is at ordinary income but 1250 is at 25%.

Question 42

What to invest in if you want to minimize the parents assets for EFC?

Answer 42

If between 529 and Roth IRA, Roth IRA could work. It does not count as parents assets and if the parent is going to have the account for more than 5 years and will be 59-1/2 by the time education funds are needed, it could work because funds are taken out tax free and grow tax free. Also if they want to fund it within IRA limits.

Question 43

Resistance levels vs support levels

Answer 43

Resistance is top Support is bottom

Question 44

Do you have a conflict of interest between spouses if they have a JT account and one wants to take out and it is not benefiting the other?

Answer 44

Yes, need others consent