CFP Certified Financial Planner MCQ 5

Question 1

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'?

Accepted Answer

Developing the financial planning recommendation(s)

Answer

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.

Question 2

A client age 72 fails to take their Required Minimum Distribution (RMD) of $20,000. What is the IRS penalty (post-SECURE 2.0)?

Accepted Answer

25% of the amount not distributed ($5,000), reduced to 10% if corrected timely

Answer

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.

Question 3

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?

Accepted Answer

Grantor Retained Annuity Trust (GRAT)

Answer

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.

Question 4

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?

Accepted Answer

$69,000 (combined employee + employer contributions, subject to net income limits)

Answer

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.

Question 5

What is the primary difference between a revocable living trust and an irrevocable trust?

Accepted Answer

A revocable trust can be changed or terminated by the grantor; an irrevocable trust generally cannot

Answer

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.

CFP - Certified Financial Planner Practice Test

CFP - Certified Financial Planner Practice Test

CFP Certified Financial Planner MCQ 5