CTFA Retirement and Employee Benefits Planning 3

Question 1

What is the primary purpose of a 529 college savings plan in financial planning?

Accepted Answer

To allow tax-free growth and tax-free withdrawals for qualified education expenses

Answer

To provide a federal income tax deduction for contributions in all states

Answer

To guarantee a specific college tuition rate at a public institution

Answer

To protect education savings from all creditors in every state

Question 2

Under SECURE 2.0, unused 529 plan funds may be rolled over to which type of account subject to specific conditions?

Accepted Answer

Roth IRA for the 529 beneficiary

Answer

Traditional IRA for the 529 account owner

Answer

Health savings account (HSA) for the beneficiary

Answer

SIMPLE IRA for the account owner

Question 3

Which type of employee benefit plan allows both employer and employee to contribute, and contributions are immediately 100% vested?

Accepted Answer

SIMPLE IRA

Answer

Profit-sharing plan

Answer

401(k) with a 3-year cliff vesting schedule

Answer

Defined benefit pension plan

Question 4

A health savings account (HSA) offers which unique tax advantage not available in a flexible spending account (FSA)?

Accepted Answer

Funds roll over indefinitely and grow tax-free, with no annual use-it-or-lose-it requirement

Answer

Contributions are deductible regardless of whether the taxpayer itemizes deductions

Answer

Distributions for any purpose are tax-free after age 65

Answer

Employers can contribute unlimited amounts on behalf of employees

Question 5

Which retirement planning concept refers to the risk that an individual will outlive their retirement savings?

Accepted Answer

Longevity risk

Answer

Sequence-of-returns risk

Answer

Inflation risk

Answer

Reinvestment risk

Question 6

What is the annual contribution limit for a health savings account (HSA) for an individual with self-only HDHP coverage in 2024?

Accepted Answer

$4,150

Answer

$3,850

Answer

$7,750

Answer

$8,300