Practice Test Geeks(CRC) Certified Retirement Counselor Practice Test
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Retirement Planning Flashcards

7 cards from real CRC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Retirement Planning flashcards as text

  1. A 403(b) plan is most commonly offered by which type of employer?

    Answer: Non-profit organizations, educational institutions, and hospitals

    403(b) plans are tax-sheltered annuity plans available to employees of public schools, non-profits, and certain other tax-exempt organizations under IRC §403(b).

  2. A retiree converts $50,000 of traditional IRA assets to a Roth IRA. The converted amount is treated as:

    Answer: Ordinary income in the year of conversion

    Roth IRA conversions are included in ordinary income in the year of conversion and taxed at marginal rates.

  3. Which of the following is a characteristic of a cash balance pension plan?

    Answer: The employer bears the investment risk and guarantees a hypothetical account balance

    In a cash balance plan, the employer credits participants with a pay credit and an interest credit, bearing all investment risk while providing a stated hypothetical account balance.

  4. The 'net unrealized appreciation' (NUA) strategy allows an employee to:

    Answer: Pay capital gains tax rates (instead of ordinary income rates) on the appreciation of employer stock distributed from a plan

    NUA allows the appreciation in employer stock distributed in-kind from a qualified plan to be taxed at long-term capital gains rates rather than ordinary income rates.

  5. In retirement planning, what does the term 'replacement ratio' refer to?

    Answer: The percentage of pre-retirement income needed to maintain the same standard of living in retirement

    The replacement ratio is the percentage of pre-retirement income that a retiree needs to maintain their lifestyle; commonly estimated at 70–90%.

  6. Under ERISA, which entity is responsible for the prudent management and investment of defined contribution plan assets?

    Answer: The plan administrator and named fiduciaries

    ERISA imposes fiduciary duties on named fiduciaries (including plan administrators and investment committee members) to act prudently and in the best interest of participants.

  7. A client wants to maximize lifetime Social Security income. In general, delaying benefits past FRA increases monthly payments by what amount per year up to age 70?

    Answer: 8%

    Delaying Social Security benefits beyond FRA earns delayed retirement credits of 8% per year, up to age 70.