RFC Retirement Planning & Strategies 2

Question 1

A 55-year-old client wants to access her 401(k) funds without penalty due to separation from service. Which rule allows this?

Accepted Answer

Rule of 55

Answer

The Rule of 55 allows penalty-free 401(k) withdrawals for employees who separate from service in or after the year they turn 55.

Question 2

Which Social Security filing strategy involves one spouse filing and immediately suspending benefits to allow the other spouse to claim spousal benefits?

Accepted Answer

File and Suspend

Answer

File and Suspend was a strategy where one spouse filed and suspended benefits so the other could collect spousal benefits while both delayed to earn delayed credits; it was largely eliminated in 2016.

Question 3

What is the primary advantage of a Roth conversion ladder for early retirees?

Accepted Answer

Creates penalty-free access to funds after a 5-year waiting period

Answer

A Roth conversion ladder allows early retirees to access converted funds penalty-free after each conversion has aged 5 years.

Question 4

Under the 4% safe withdrawal rule, how much could a retiree with a $1,000,000 portfolio withdraw annually while maintaining a high probability of not outliving assets over 30 years?

Accepted Answer

$40,000

Answer

The 4% rule suggests withdrawing 4% of the initial portfolio value, or $40,000 from a $1,000,000 portfolio, adjusted for inflation annually.

Question 5

A defined benefit pension plan's benefit formula is 1.5% × years of service × final average salary. An employee with 25 years of service and a $100,000 final average salary would receive an annual pension of:

Accepted Answer

$37,500

Answer

The calculation is 0.015 × 25 × $100,000 = $37,500 annual pension benefit.

(RFC) Registered Financial Consultant Practice Test

(RFC) Registered Financial Consultant Practice Test

RFC Retirement Planning & Strategies 2