Question 1
0 out of 2 points

Please use the case: Cheryl when responding to this question.

Code Consulting offers an "Excess SERP". What would be the unique feature in the design of this plan?

Selected Answer:
A.
Will allow for deferral of compensation in excess of an employee-established base level

Question 2
2 out of 2 points

Please use the case: Cheryl when responding to this question.

After explaining how a stock option works, Cheryl remains a bit confused by the terminology of these plans. She asks to go over the important dates in the life of a plan one more time in chronological order. How would you best respond to this question?

Selected Answer:
A.
Grant --> Vest --> Exercise --> Sale

Question 3
0 out of 2 points

Please use the case: Cheryl when responding to this question.

Cheryl is curious to know what other types of benefit plans she may encounter in her executive career that incorporates actual company shares. All of the following would likely be included in your response to this question EXCEPT:

Selected Answer:
A.
Stock Bonus Plan

Question 4
2 out of 2 points

Please use the case: Cheryl when responding to this question.

Which of the following choices correctly describe taxes that would be associated with the ISO option offered by Code Consulting, assuming all ISO requirements are met?

Capital gains tax on difference between exercise price and sale price
Ordinary income tax on stock price at day of grant
Capital gains tax on difference between sale price and market value at exercise
Ordinary income tax on bargain element
Selected Answer:
A.
I only

Question 5
0 out of 2 points

Which of the following topics should be discussed with a younger client just beginning to save for retirement?

Purchasing long term care insurance
Reviewing health insurance coverage
Converting funds to an income annuity
Determining how much to defer to an employer-sponsored retirement plan
Establishing an emergency fund
Medicare planning
Selected Answer:
B.
I, II, IV, V

Question 6
2 out of 2 points

Section 401(k) plans are among the most popular forms of employer-sponsored retirement benefits. Which of the following could be plausible explanations for the popularity of this type of plan?

Plans allow higher contributions for older employees
Plans allow for a combination of employee and employer contributions
Plans provide a guaranteed minimum return on contributed funds
Contributions may be made on a pre- or post-tax basis
Selected Answer:
C.
I, II, and IV

Question 7
0 out of 2 points

Which of the following individuals would be considered a fiduciary of an employer-sponsored 401(k) plan?

Selected Answer:
B.
Financial advisor providing investment advice to the plan

Question 8
2 out of 2 points

All of the following are distribution options available to qualified plan, 403(b), eligible 457(b), and/or IRA beneficiaries who do not receive benefits in the form of a qualified annuity EXCEPT:

Selected Answer:
C.
Annuity Factor Method

Question 9
2 out of 2 points

Which of the following describes eligible investments that may be held in a traditional or Roth IRA account?

Any common stock or preferred stock
Any open-end fund, closed-end fund, or ETF
Funds or stocks selected by the IRA sponsor for inclusion as investment options for IRAs
Limited partnerships and master limited partnerships
Selected Answer:
C.
I, II, and IV

Question 10
2 out of 2 points

A new client has come to you with the intention of consolidating multiple retirement accounts from her previous employers into an IRA account under your management. She has been with her current employer for 3 years contributing to a 401(k) retirement plan. All of the following types of retirement plan accounts, all from previous employers, may be rolled over to the new IRA EXCEPT:

Selected Answer:
D.
457(f)

Question 11
2 out of 2 points

Unforeseen emergencies for which a distribution will be allowed from an eligible section 457(b) plan include:

Costs of a first-time home purchase
Loss of property due to casualty
A sudden and unexpected illness
Education expenses
Selected Answer:
C.
II and III

Question 12
2 out of 2 points

Jacqueline is required to cover 40% of the cost of her disability insurance, with her employer funding the remaining 60% of premium costs. After becoming disabled, Jacqueline receives a benefit from her group policy of $10,000 per month. How much of this monthly benefit will be included as taxable income on Jacqueline's tax return?

Selected Answer:
C.
$6,000

Question 13
2 out of 2 points

Which of the following plans would you recommend to a business owner who wants to reward employees when the business is successful, but is concerned with making a commitment to providing a specific amount of employer contributions each year:

Selected Answer:
D.
Profit-Sharing Plan

Question 14
2 out of 2 points

Which type of annuity provides returns that are linked to the performance of mutual-fund like sub-accounts?

Selected Answer:
C.
Variable Annuity

Question 15
2 out of 2 points

Medicare consists of four different types of coverage. Which of the following are NOT possible combinations of coverage types for an individual enrolled in this program?

Part A and B
Part A, B, and C
Part A, B, and D
Part B and D
Selected Answer:
C.
II and IV

Question 16
0 out of 2 points

When and how is an employee taxed on the bargain element of a non-qualified stock option:

Selected Answer:
B.
Ordinary income at time of vest

Question 17
0 out of 2 points

All of the following are correct statements concerning the Cash Reserve Account strategy EXCEPT:

Selected Answer:
B.
Funds from the cash reserve account should be withdrawn in place of portfolio distributions during a down market

Question 18
2 out of 2 points

Which of the following plans provides for the most flexibility with respect to employer contributions?

Selected Answer:
C.
Simplified Employee Pension IRA (SEP-IRA)

Question 19
2 out of 2 points

When applying for Medicaid all of the following constitute a "countable asset" EXCEPT:

Spouse's section 401(k) plan
Equity in home owned jointly with spouse
Worker's own section 401(k) plan
Jointly owned investment account
Selected Answer:
A.
II only

Question 20
2 out of 2 points

Which of the following types of funds would be most appropriate as an investment option for an employer-sponsored defined contribution plan with participant-directed investments?

Diversified international stock fund
Single country international stock fund
Inverse return bear market fund
Target date retirement fund
Selected Answer:
A.
I and IV

Question 21
2 out of 2 points

Which of the following either provides or can be designed to provide long term inflation adjusted income during retirement?

Cash Reserve Account
Pooled or Segmented Accounts
A Diversified Investment Portfolio
A Laddered Bond Portfolio
Annuity Income
Selected Answer:
D.
II, III and V

Question 22
2 out of 2 points

Under which of the following conditions will an employee be able to exclude the value of key employee life insurance from his or her taxable income?

Selected Answer:
C.
When the corporation owns the policy, pays all premiums, and is the sole beneficiary

Question 23
0 out of 2 points

Richard, age 55, is a client of yours who is looking for a new job. He is very interested in finding a company that offers a retirement plan and would like to know which type of plan would most likely be best for him.

Selected Answer:
B.
Age Based Profit Sharing Plan

Question 24
2 out of 2 points

Elizabeth has received several types of medical care over the past month. Which type would be covered by Medicare Part B?

Outpatient hospital procedure
Prescription for chronic medical condition
Home health aid to assist in activities of daily living
Physician office visit
Selected Answer:
A.
I and IV

Question 25
2 out of 2 points

You are working as a retirement plan specialist with a local financial services company. Many of the firm's advisors, confused with respect to the number of possible retirement plans and where each one might be suitable, have asked you to summarize what features to look for in a business to indicate that a non-qualified deferred compensation plan could be a good fit. Of the following characteristics, which might you reasonably include on this list?

A closely-held employer that is recruiting executives accustomed to receiving stock grants and/or options at publicly held corporations
An employer wants to recruit, retain, and reward key executives
Employer wants to provide additional retirement benefits to top executives without incurring the cost of funding these benefits for all employees
Employer wants to obtain additional tax deductions from employee benefit programs
Selected Answer:
C.
I, II, and III

Question 26
2 out of 2 points

Qualified accounts being left to named beneficiaries may be subject to which of the following taxes?

State Estate Tax
State Income Tax
Federal Income Tax
Federal Estate Tax
Selected Answer:
D.
All of the above

Question 27
2 out of 2 points

Which of the following types of retirement plans links received benefits directly to the performance of a corporation's stock price?

Phantom stock plan
Supplemental bonus plan
Stock appreciation rights
Stock options
Selected Answer:
A.
I, III, and IV

Question 28
2 out of 2 points

Which of the following best describes a Qualified Domestic Relations Oder (QDRO):

Selected Answer:
A.
A court order instructing that a specified portion of a participant's qualified accounts be distributed to their spouse as part of a divorce settlement

Question 29
2 out of 2 points

Which benefit programs included in the list below provide neither a death benefit to beneficiaries nor the accumulation of capital in an investment account for the participant?

Group Term Life Insurance Plan
Profit Sharing Plan
Dependent Care Assistance Plan
Non-qualified Deferred Compensation Plan
Short-term Disability Plan
Selected Answer:
B.
III and V

Question 30
2 out of 2 points

All of the following statements concerning Required Minimum Distributions are true EXCEPT:

Selected Answer:
D.
The beneficiary of an IRA must always follow the same distribution schedule as the original participant

Question 31
2 out of 2 points

Lori followed your advice and delayed receipt of Social Security retirement benefits to age 70, increasing her benefit amount from her FRA benefit of $1,850 per month to $2,442 per month. Her husband, Fred, receives his own benefit amount of $1,575 per month. If Lori were to pass away at age 74, after receiving benefits for only 4 years, what survivor income amount would Fred receive? For purposes of this question ignore any possible inflation adjustments.

Selected Answer:
D.
$2,442

Question 32
0 out of 2 points

Which of the following plans would be inappropriate for a client whose expressed goal is to extend tax-deferral of contributed assets for as long as possible into retirement:

Ineligible 457(f) Plan
Pre-tax 401(k) Plan
Roth 401(k) Plan
Eligible 457(b) Plan
Selected Answer:
A.
I, II, and IV

Question 33
0 out of 2 points

Qualified plans use various formulas to determine required employer funding. Which of the following are examples of methods used by one or more type of plan for determining employer contributions?

Fixed amount or percentage of compensation
Recurring and substantial amount that may vary substantially from year to year
Actuarial cost calculated on an annual basis
Fixed amount or percentage of intended retirement income benefit
Selected Answer:
D.
All of the above

Question 34
2 out of 2 points

Which of the following does NOT constitute a major advantage of a completed and funded buy-sell agreement?

Selected Answer:
D.
Allows the value of the business to be determined by market conditions at the time of the owner's death

Question 35
2 out of 2 points

A junior planner working for you is preparing cash flow projections for a senior HR manager earning $160,000 per year in W-2 income. Your junior planner shows a draft projection listing FICA taxes for 2019 at $12,240. Which of the following choices would be an appropriate comment to write next to this number on the plan?

Selected Answer:
D.
Please revise, Social Security taxes are not paid on income over $132,900 (2019).

Question 36
2 out of 2 points

Which of the following are the minimum required steps in order for an eligible small business to establish a Simplified Employee Pension plan (SEP) for its employees:

Draft a plan document and obtain an IRS determination letter to approve its use
Complete form 5305-SEP
File form 5305-SEP with the Internal Revenue Service
File form 5500 following the completion of the first plan year
Selected Answer:
A.
II only

Question 37
2 out of 2 points

Which of the following constitutes a welfare benefit plan covered by ERISA regulations?

Selected Answer:
D.
All of the above

Question 38
0 out of 2 points

Which of the following types of plans would an employer most likely establish in order to allow highly compensated executives to receive the same level of net income replacement as rank-and-file employees from their defined benefit retirement pension plan:

Selected Answer:
A.
Cross-tested defined benefit pension plan

Question 39
2 out of 2 points

Which type of tax-advantaged account provides the largest number of possible investments to the account holder?

Selected Answer:
B.
Traditional IRA

Question 40
2 out of 2 points

What is the primary purpose of key employee life insurance?

Selected Answer:
D.
To support business continuity following the death of an important employee

Question 41
2 out of 2 points

Erin Abrams is a 35-year-old local cardiac surgeon and single mother who has come to you for advice regarding a recent disability. An injury to her hand has left her unable to perform surgeries but otherwise she is in good health. Erin is concerned that without the high income she derives from performing surgical procedures she will not be able to provide for her twin boys, who are 12 years old. She has become accustomed to her level of income working in the medical field for the past 7 years. Which of the following would be the most accurate and comprehensive description as it relates to Erin's condition with respect to Social Security disability benefits?

Selected Answer:
A.
Erin is unlikely to qualify for Social Security disability benefits.

Question 42
2 out of 2 points

Which of the following features might you choose to highlight in a presentation to new participants on their company's 401(k)/Profit Sharing Plan?

Contributions to the plan will consist entirely of salary deferrals
Employer contributions will be taxable income to employees in the year they are made
Hardship withdrawals and loans may allow participants to access funds prior to retirement
Each participant may determine their own individual deferral rate to the plan, within IRS limits
Selected Answer:
C.
III and IV

Question 43
2 out of 2 points

Which of the following plan entities are able to sponsor a retirement plan that is exempt from the provisions of ERSIA?

Selected Answer:
B.
A municipal government

Question 44
0 out of 2 points

Non-qualified plans do not, in general, receive the same degree of tax benefits as qualified plans. All of the following are among the tax benefits of a qualified plan EXCEPT:

Selected Answer:
D.
A business may deduct contributions to the plan in the year they are made, even though they may not be taxable to the benefitting employees in that year

Question 45
2 out of 2 points

Each of the following organizations would be eligible to establish a section 403(b) retirement plan EXCEPT:

Selected Answer:
C.
Political fundraising organizations under IRC Section 527

Question 46
2 out of 2 points

Your client Catherine has had a successful career as an executive at a local marketing company and is retiring early at age 56 to pursue other interests. She has accumulated assets in a traditional IRA as well as in her employer-sponsored 401(k) plan. In Catherine's situation which of the following distribution rules applies to her IRA but NOT to the accumulated pre-tax assets within her 401(k)?

No penalty will be applied to a qualifying series of substantially equal periodic payments under section 72(t).
If section 72(t) is not used and no other exceptions are available, penalties will apply to any distributions taken prior to age 59½.
The full amount of all distributions, even if meeting the criteria for penalty free withdrawals, will be subject to ordinary income tax.
Required minimum distributions must begin by April 1st of the year following the year in which the account holder turns 70½, even if still employed.
Selected Answer:
A.
II and IV only

Question 47
0 out of 2 points

Please use the case: Ed and Margaret when responding to this question.

At one point in the conversation Ed comments that Margaret needs to make it to retirement, especially since they will lose all the value of her pension if she doesn't. How would you best respond to this?

Selected Answer:
C.
Disagree and point that Margaret's plan is required to provide a qualified lump sum present value payment if Margaret passes away.

Question 48
2 out of 2 points

Please use the case: Ed and Margaret when responding to this question.

Ellie would like to begin saving for retirement while she's living with her parents and her expenses are lower, but is not yet eligible for her employer's 401(k) plan. What type of account would you recommend Ellie use to establish a degree of retirement savings?

Selected Answer:
C.
Contribute to a Roth IRA

Question 49
2 out of 2 points

Please use the case: Ed and Margaret when responding to this question.

Ed has read that you can withdraw contributions to Roth accounts without a penalty and wonders if performing Roth conversions could be a good way of accessing pre-tax assets to fund Kate's graduation trip? Choose the best answer.

Selected Answer:
B.
No, this strategy would result in a 10% premature penalty distribution being applied.

Question 50
2 out of 2 points

Please use the case: Ed and Margaret when responding to this question.

Will Margaret's parents be able to follow through on their plan to contribute to an IRA for Kate? Choose the best answer.

Selected Answer:
C.
No, Kate has no current-year earned income to contribute.