CFP Retirement Planning & Distribution Strategies 2

Question 1

A client wants to retire at age 62. Which Social Security strategy should they consider regarding claiming benefits?

Accepted Answer

Wait until full retirement age (FRA) or later to maximize monthly benefit

Answer

Delaying Social Security benefits until FRA or age 70 increases the monthly benefit, which is generally advisable for healthy clients with longer life expectancies.

Question 2

What is the maximum annual contribution to a SEP-IRA for a self-employed individual in 2024?

Accepted Answer

$69,000

Answer

The SEP-IRA contribution limit for 2024 is the lesser of 25% of compensation or $69,000.

Question 3

Which retirement plan type is best suited for a small business owner with no employees who wants the highest possible contribution limit?

Accepted Answer

Solo 401(k)

Answer

A Solo 401(k) allows both employee and employer contributions, enabling contributions up to $69,000 in 2024 (plus catch-up), making it optimal for solo self-employed individuals.

Question 4

What does the term 'vesting schedule' refer to in a 401(k) plan with employer matching?

Accepted Answer

The schedule by which the employee earns ownership rights over employer contributions

Answer

A vesting schedule determines when an employee gains full ownership of employer-contributed funds, either through cliff vesting or graded vesting.

Question 5

A 55-year-old client leaves their employer and wants to access 401(k) funds without penalty. Which rule allows this?

Accepted Answer

Rule of 55

Answer

The Rule of 55 allows penalty-free 401(k) distributions if the employee separates from service in or after the year they turn 55.

CFP - Certified Financial Planner Practice Test

CFP - Certified Financial Planner Practice Test

CFP Retirement Planning & Distribution Strategies 2