CRC Retirement Planning 3 — Questions and Answers
Question 1: Which Medicare part covers inpatient hospital stays, skilled nursing facility care, and hospice?
- Medicare Part A (Correct answer)
- Medicare Part B
- Medicare Part C
- Medicare Part D
Correct answer: Medicare Part A
Medicare Part A covers inpatient hospital care, skilled nursing facility stays, hospice, and some home health care.
Question 2: A retiree using a 'bucket strategy' typically fills the first bucket with assets intended to cover how many years of expenses?
- 1–2 years
- 3–5 years (Correct answer)
- 7–10 years
- 10–15 years
Correct answer: 3–5 years
The first bucket in a bucket strategy typically holds 3–5 years of living expenses in cash or short-term instruments to cover near-term needs.
Question 3: A client aged 70½ inherits a traditional IRA from a non-spouse. Under current rules, non-spouse beneficiaries who are not eligible designated beneficiaries must withdraw all funds within:
- 5 years
- 10 years (Correct answer)
- 15 years
- Their own life expectancy
Correct answer: 10 years
Under the SECURE Act, most non-spouse beneficiaries must fully distribute inherited IRAs within 10 years of the original owner's death.
Question 4: Which type of annuity provides a guaranteed income stream that begins immediately after a lump-sum purchase?
- Deferred variable annuity
- Immediate fixed annuity (SPIA) (Correct answer)
- Equity-indexed annuity
- Longevity annuity (QLAC)
Correct answer: Immediate fixed annuity (SPIA)
A Single Premium Immediate Annuity (SPIA) converts a lump sum into an income stream that starts within one payment period of purchase.
Question 5: In the context of Social Security spousal benefits, a spouse who has never worked can receive a maximum spousal benefit equal to what percentage of the worker's full retirement age benefit?
- 33%
- 50% (Correct answer)
- 67%
- 100%
Correct answer: 50%
A spouse with no work record is entitled to a spousal benefit of up to 50% of the worker's primary insurance amount (PIA) at FRA.
Question 6: The 'glide path' in target-date retirement funds refers to:
- The annual fee trajectory as the fund matures
- The gradual shift from higher equity allocation to higher fixed-income allocation as the target date approaches (Correct answer)
- The rebalancing schedule applied quarterly
- The inflation adjustment applied to the income replacement ratio
Correct answer: The gradual shift from higher equity allocation to higher fixed-income allocation as the target date approaches
A glide path describes how a target-date fund progressively reduces equity exposure and increases fixed income as the investor nears and enters retirement.
Question 7: What is the primary purpose of a Qualified Longevity Annuity Contract (QLAC) within a retirement account?
- To generate immediate income and eliminate RMD obligations
- To defer income to advanced age (up to 85) while reducing current RMD calculations (Correct answer)
- To provide tax-free income in retirement similar to a Roth IRA
- To fund long-term care expenses without penalty
Correct answer: To defer income to advanced age (up to 85) while reducing current RMD calculations
A QLAC allows retirement savers to use a portion of IRA funds to purchase a deferred annuity starting as late as age 85, and those funds are excluded from RMD calculations until payments begin.
