Practice Test GeeksCRPC - Chartered Retirement Planning Counselor Practice Test
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Retirement Income Taxation Flashcards

7 cards from real CRPC 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 Income Taxation flashcards as text

  1. A client aged 60 receives a lump-sum distribution from his employer's qualified plan and his employer's stock has Net Unrealized Appreciation (NUA) of $40,000. How is the NUA taxed when he later sells the stock?

    Answer: As long-term capital gains when the stock is sold

    NUA is taxed as long-term capital gains in the year the employer stock is sold, regardless of how long the stock is held after distribution.

  2. Which of the following Roth IRA distributions would be fully tax-free and penalty-free?

    Answer: Earnings withdrawn at age 64, account opened 6 years ago

    A qualified Roth IRA distribution requires the owner to be at least 59½ AND the account to have been open for at least 5 tax years.

  3. A client inherits a traditional IRA from a non-spouse. Under the SECURE Act 2.0 rules, what is the maximum time frame for distributing the inherited IRA?

    Answer: 10 years

    The SECURE Act generally requires most non-spouse beneficiaries to fully distribute inherited IRAs within 10 years of the original owner's death.

  4. When using the Simplified Method to determine the tax-free portion of an annuity from a qualified plan, what is the key input used to calculate the exclusion ratio?

    Answer: The employee's after-tax contributions and expected number of payments

    The Simplified Method divides the employee's cost basis (after-tax contributions) by the expected number of payments based on age to determine the monthly tax-free exclusion amount.

  5. A traditional IRA owner turns 73 in 2024. She has three traditional IRAs. How must she satisfy her RMD obligation?

    Answer: Calculate the total RMD and take it from any one or combination of IRAs

    For traditional IRAs, the total RMD across all IRAs can be aggregated and withdrawn from any one or combination of the owner's IRAs.

  6. Which of the following correctly describes the tax treatment of a non-qualified annuity distribution using the exclusion ratio?

    Answer: A pro-rata portion of each payment is tax-free based on the ratio of basis to expected total return

    The exclusion ratio for non-qualified annuities allocates a tax-free portion of each annuity payment based on basis divided by total expected return.

  7. A 65-year-old client converts $50,000 from a traditional IRA to a Roth IRA. Which of the following consequences is CORRECT?

    Answer: The $50,000 is added to ordinary income in the year of conversion

    A Roth conversion is a taxable event; the converted amount is added to ordinary income in the year of the conversion.