FREE Ultimate Certified Financial Planner Questions and Answers
Which of the following strategies would bring in money for a publicly traded charity for a predetermined amount of time while allowing the underlying stocks' growth to eventually go back to the donor's family?
Explanation:
For a predetermined number of years, a charitable lead annuity trust will provide income to the charitable beneficiary based on the initial gift amount, and at the end of the term, the assets will pass to the non-charity beneficiaries, who are typically the donor's heirs.
At the time of his mother's passing in 2025, Kenneth will receive her whole estate, which is an investment portfolio of individual stocks, valued at $1,250,000. No previous gifts had been given. For $50,000, she had spent the 1980s to acquire these stocks. How much tax does Kenneth owe if he sells the securities for $1,300,000 nine months after receiving them, presuming there are no state capital gains taxes or inheritance taxes? Let's say that Kenneth is single, has an annual salary of $300,000, and no dividends were given.
Explanation:
Due to Kenneth's marital status and income, the $50,000 in capital gains from the sale date following his death are taxed at a 15% rate.
Thor, 25, works as an engineer for a Fortune 500 company and makes $92,000 each year. He has been there for three years. Loki contributes 9% of his salary, with the first 4% matched dollar for dollar. Which of the following, assuming all net returns after expenses and fees are equal at 8% per year over the accumulation time period and that he can contribute $4,000 per year into any of the alternatives, will produce the highest after-tax income at age 65?
Explanation:
When taken out of a Roth IRA, the full $1,036,226.07 will not be subject to income tax.
Megs wants to sell her Xf Automotive (an electric car firm) stock to lock in a profit, but she fears that due to company-specific risk, it may soon suffer a significant decline. If she thinks electric cars will be around in the future, she should:
Explanation:
The purchase of an ETF with stock sale proceeds is not a tax-wash transaction, and the gain is locked in while permitting participation in the market while lowering company-specific risk.
Which of the following combinations of investments would present the lowest risk to a female retiree 72 years old while still providing her with a respectable inflation hedge for her 15 year life expectancy, according to Modern Portfolio Theory?
Explanation:
A cash component that, while modest, provides the portfolio with stability over long periods and is also low enough to avoid losing too much ground in an inflationary climate. Over time, the equity (Stock) component will balance off this inflationary risk. The higher portion of The Efficient Frontier is where a portfolio with more bonds than stocks will land.
Due to the patent portfolio, she built and the fortune she inherited from her family, Natasha is incredibly affluent on her own. She was a wise saver while she was working, and her 401(k), which she turned over into an IRA, now has a $2,000,000 value. What are the tax implications for Natasha's retirement if she is 74 years old?
Explanation:
Any RMD distributions that are due but are not made are subject to a 50% penalty.
Rosie is an architect who works as a 1099 employee on a contract basis for numerous companies in New York City. She is a single woman who makes a net income of $130,000 and is worried about saving money for retirement. Which approach will enable her to save the most cash before taxes?
Explanation:
A SEP IRA can only be taxed on up to 25% of income, or $68,000, in contributions.