Certified Financial Planner MCQ Flashcards
7 cards from real CFP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Certified Financial Planner MCQ flashcards as text
Under the CFP Board's financial planning process, which step immediately follows 'Analyzing the Client's Current Course of Action and Potential Alternative Courses of Action'?
Answer: Developing the financial planning recommendation(s)
According to the CFP Board's 7-step financial planning process, after analyzing alternatives, the planner develops and presents specific recommendations tailored to the client's situation.
A client age 72 fails to take their Required Minimum Distribution (RMD) of $20,000. What is the IRS penalty (post-SECURE 2.0)?
Answer: 25% of the amount not distributed ($5,000), reduced to 10% if corrected timely
SECURE 2.0 reduced the RMD failure penalty from 50% to 25%, further reducible to 10% if the shortfall is corrected within the correction window.
Which estate planning technique allows a grantor to transfer assets to an irrevocable trust, receive an annuity payment for a fixed term, and pass the remainder to heirs with minimized gift tax?
Answer: Grantor Retained Annuity Trust (GRAT)
A GRAT allows the grantor to transfer assets to an irrevocable trust, receive fixed annuity payments, and pass any growth above the IRS Section 7520 rate to beneficiaries with little or no gift tax.
A self-employed individual with net self-employment income of $100,000 wants to maximize retirement savings in 2024 using a Solo 401(k). What is the maximum total contribution?
Answer: $69,000 (combined employee + employer contributions, subject to net income limits)
A Solo 401(k) allows up to $23,000 in employee deferrals plus a 25% employer contribution on net self-employment income (up to the $69,000 total limit), making it the most powerful retirement vehicle for the self-employed.
What is the primary difference between a revocable living trust and an irrevocable trust?
Answer: A revocable trust can be changed or terminated by the grantor; an irrevocable trust generally cannot
A revocable living trust can be amended or revoked by the grantor at any time during their lifetime, while an irrevocable trust generally cannot be changed once established.
Which long-term care insurance policy feature adjusts the daily benefit amount each year to help keep pace with inflation?
Answer: Inflation protection rider (compound 3% or 5%)
An inflation protection rider, typically at 3% or 5% compound annual growth, automatically increases the daily benefit amount each year to help the policy keep pace with rising long-term care costs.
A client asks about the tax treatment of municipal bond interest. Which statement is most accurate?
Answer: Municipal bond interest is exempt from federal income tax and often exempt from state tax if issued in the investor's home state
Interest from municipal bonds is generally exempt from federal income tax and, in most states, also exempt from state income tax when the bond is issued within the investor's state of residence.