FFC FFC Retirement and Estate Planning 2

Question 1

What is the federal estate tax exemption amount per individual for 2024?

Accepted Answer

$13.61 million

Answer

The federal estate tax exemption for 2024 is $13.61 million per individual, meaning estates below this threshold owe no federal estate tax.

Question 2

A client wants to ensure their IRA passes directly to their children without going through probate. What is the most effective way to accomplish this?

Accepted Answer

Name the children as beneficiaries on the IRA beneficiary designation form

Answer

Beneficiary designation forms on retirement accounts override will instructions and allow assets to transfer directly to named individuals outside of probate.

Question 3

Which retirement income strategy involves converting a lump-sum into a series of guaranteed payments for life, protecting against longevity risk?

Accepted Answer

Annuitization

Answer

Annuitization converts a lump-sum into a stream of guaranteed lifetime income payments from an insurance company, eliminating the risk of outliving one's assets.

Question 4

What is 'portability' in the context of federal estate tax planning for married couples?

Accepted Answer

Allowing a surviving spouse to use the deceased spouse's unused estate tax exemption

Answer

Portability allows a surviving spouse to elect to use the deceased spouse's unused federal estate tax exemption, effectively doubling the couple's total exemption with proper filing.

Question 5

What is a key advantage of a Health Savings Account (HSA) in retirement planning beyond its primary healthcare purpose?

Accepted Answer

After age 65, funds can be withdrawn for any purpose with only ordinary income tax, making it similar to a traditional IRA

Answer

After age 65, HSA withdrawals for non-medical expenses are subject only to ordinary income tax (no 10% penalty), making the HSA function like a traditional IRA with the added bonus of tax-free medical withdrawals.

(FFC) Financial Fitness Coach Certification Practice Test

(FFC) Financial Fitness Coach Certification Practice Test

FFC FFC Retirement and Estate Planning 2