CRPC - Chartered Retirement Planning Counselor Social Security and Pensions Questions and Answers

Question 1

A client, age 63, plans to claim Social Security benefits this year.
Their full retirement age (FRA) is 67.
They will continue to work, earning $50,000 annually.
How will the Social Security earnings test impact their benefits for the current year?

Accepted Answer

Their benefits will be permanently reduced based on their claiming age, and a temporary reduction will be applied due to earnings, which is later restored.

Answer

Their benefits will be reduced by $1 for every $2 earned over the annual limit, and this reduction is permanent.

Answer

No earnings test will be applied because they are over age 62.

Answer

Their benefits will be reduced by $1 for every $3 earned over the annual limit, and they can reapply for the withheld amount at FRA.

Question 2

A married couple, both age 68 and retired, are filing their federal income tax return jointly. Their income consists of $40,000 from a corporate pension and $20,000 in tax-exempt interest. They also received $50,000 in Social Security benefits. What percentage of their Social Security benefits will be subject to federal income tax?

Accepted Answer

85%

Answer

50%

Answer

0%

Answer

100%

Question 3

Which of the following is a key characteristic that distinguishes a defined benefit pension plan from a defined contribution plan?

Accepted Answer

The plan specifies the benefit amount the employee will receive at retirement.

Answer

The employee bears the primary investment risk.

Answer

The plan consists of individual employee accounts.

Answer

The final benefit amount is dependent on market performance.

Question 4

A client is going through a divorce. Their spouse is entitled to a portion of their 401(k) plan assets. Which legal instrument is required to properly divide the retirement plan assets without causing a taxable event for the plan participant?

Accepted Answer

A Qualified Domestic Relations Order (QDRO)

Answer

A prenuptial agreement

Answer

A separation agreement

Answer

A letter of instruction to the plan administrator

Question 5

An individual born in 1960 is planning their retirement. According to current Social Security law, what is their Full Retirement Age (FRA) for claiming unreduced Social Security benefits?

Accepted Answer

67

Answer

66 and 2 months

Answer

66

Answer

65

Question 6

A CRPC® is advising a client who will reach Full Retirement Age (FRA) of 67 in September of the current year. The client plans to work until the end of the year, earning $80,000. How will the Social Security earnings test apply to this client for the current year?

Accepted Answer

A higher earnings limit applies to the months before FRA, with a $1 for $3 reduction for earnings above that limit.

Answer

The lower earnings limit applies for the entire year, and benefits are reduced by $1 for every $2 earned above it.

Answer

No earnings limit applies because the client reaches FRA during the year.

Answer

The earnings test only applies if the client claims benefits before the month they reach FRA.

A client, age 63, plans to claim Social Security benefits this year.Their full retirement age (FRA) is 67.They will continue to work, earning $50,000 annually.How will the Social Security earnings test impact their benefits for the current year?

A client, age 63, plans to claim Social Security benefits this year.
Their full retirement age (FRA) is 67.
They will continue to work, earning $50,000 annually.
How will the Social Security earnings test impact their benefits for the current year?