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 married couple filing jointly has combined income of $44,000, of which $20,000 is Social Security. What percentage of their Social Security benefit is taxable?

    Answer: 50%

    With combined income between $32,000 and $44,000 for MFJ, up to 50% of Social Security benefits are includible in taxable income.

  2. Which of the following is NOT an exception to the 10% early withdrawal penalty for distributions from a traditional IRA before age 59½?

    Answer: Separation from service at age 55

    The age-55 separation-from-service exception applies to qualified retirement plans (401k), not IRAs.

  3. Under the pro-rata rule, a client with a traditional IRA containing $90,000 of pre-tax funds and $10,000 of nondeductible contributions converts $20,000 to a Roth IRA. How much of the conversion is taxable?

    Answer: $18,000

    The taxable portion is 90% (pre-tax ratio) × $20,000 = $18,000, because non-deductible basis is 10% of the total $100,000 balance.

  4. A retiree receives a $30,000 pension that is entirely funded by employer contributions. How is this pension income taxed?

    Answer: Entirely taxable as ordinary income

    Pension distributions fully funded by an employer with no after-tax employee contributions are 100% taxable as ordinary income.

  5. What is the income threshold above which 85% of Social Security benefits may be included in taxable income for a single filer?

    Answer: $34,000

    For single filers, combined income above $34,000 triggers the 85% inclusion rate for Social Security benefits.

  6. Which tax form is used to report the taxable portion of pension and annuity distributions received from a qualified retirement plan?

    Answer: Form 1099-R

    Form 1099-R is issued by payers of retirement distributions and reports the gross and taxable amounts of pension and annuity income.

  7. A client takes a 72(t) SEPP distribution from her IRA at age 52. She then takes an additional lump-sum distribution at age 56. What is the tax consequence?

    Answer: Retroactive 10% penalty on all prior SEPP distributions plus interest

    Modifying or terminating a SEPP plan before age 59½ triggers the 10% penalty retroactively on all prior SEPP distributions, plus IRS interest.