CFP Certified Financial Planner MCQ 3

Question 1

A client wants to gift $30,000 to their child in 2024. How much is subject to federal gift tax reporting?

Accepted Answer

$12,000; the excess over $18,000 annual exclusion

Answer

The 2024 annual gift tax exclusion is $18,000 per recipient; the $12,000 excess ($30,000 − $18,000) must be reported on Form 709 and applied against the lifetime exemption.

Question 2

Which retirement plan allows the highest employee elective deferral limit in 2024 among the following options?

Accepted Answer

401(k)

Answer

The 2024 employee elective deferral limit for a 401(k) is $23,000 (plus $7,500 catch-up for those 50+), which is higher than SIMPLE IRA ($16,000) or IRA ($7,000) limits.

Question 3

A client's estate is valued at $14 million at death in 2024. Assuming no prior taxable gifts, how much is subject to federal estate tax?

Accepted Answer

Approximately $700,000 (excess over $13.61M exemption)

Answer

The 2024 federal estate tax exemption is $13.61 million; the estate of $14 million exceeds this by approximately $390,000, which is subject to the 40% estate tax rate.

Question 4

Which asset allocation concept describes shifting a portfolio to more conservative investments as a client approaches retirement?

Accepted Answer

Glide path

Answer

A glide path is the planned shift from aggressive to conservative allocations over time, commonly used in target-date funds as investors approach their retirement date.

Question 5

Under ERISA, which party is legally responsible for ensuring a qualified retirement plan operates solely in the interest of plan participants?

Accepted Answer

The plan fiduciary

Answer

ERISA imposes fiduciary responsibility on plan fiduciaries (trustees, investment managers, plan administrators) to act solely in the interest of plan participants and beneficiaries.

CFP - Certified Financial Planner Practice Test

CFP - Certified Financial Planner Practice Test

CFP Certified Financial Planner MCQ 3