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CFP EXAM TEST BANK QUESTIONS WITH COMPLETE SOLUTIONS
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CFP EXAM TEST BANK QUESTIONS WITH COMPLETE SOLUTIONS
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CFP EXAM TEST BANK QUESTIONS WITHCOMPLETE SOLUTIONS
15% profit sharing plan calculation for Keogh and SEP
calculation Correct Answer multiply business profit by 12.12%
2 through 6 year graded vesting schedule Correct Answer Year
1 - 0% vesting (one year is needed)
Year 2 - 20% vesting
Year 3 - 40% vesting
Year 4 - 60% vesting
Year 5 - 80% vesting
Year 6 - 100% vesting
25% profit sharing plan calculation for Keogh and SEP
calculation Correct Answer multiply business profit by 18.59%
401(a)(17) limit Correct Answer Limit that requires defined
contribution plans to only use a max of $330k of employers
salary
402 limit Correct Answer $22,500, Participant can not defer
more than $22,500 of salary to DC plan
403b keys Correct Answer For 501(c)(3) organizations and
public schools
Subject to ERISA only if employer contributes
Salary reduction limit to $22,500 (FICA)
Employer contributions may be subject to vesting schedule
,404 Limit Correct Answer 25%, employer contributions can
not exceed more than 25% of employees salary. Max salary use
amount is $330k
415 limit Correct Answer Total of employer contributions,
employee deferral contributions, and profit sharing can not
exceed $66,000
A beneficiary who is at least two generations younger than the
transferor
Or unrelated persons who are more than 37.5 years younger than
the transferor Correct Answer Skip Person
A condition that may create or increase the chance of loss
arising from a given peril Correct Answer Hazard
A condition with a possibility of loss (a situation where an
exposure to loss exists) Correct Answer Risk
A formula measuring the relationship between systematic risk
and return Correct Answer Capital Asset Pricing Model
(CAPM)
A passive investment whose primary source of return is the
potential for price appreciation and may even have a negative
cash low Correct Answer Land - Unimproved
A service organization and a professional organization Correct
Answer Affiliated service group
A source of tax law Correct Answer Treasury Regulations
,A tendency to make decisions based on the information that is
the most readily available or easy to recall but not necessarily
relevant to the current choice being made Correct Answer
Availability Bias
A trust that is considered merely a conduit for forwarding
income to the beneficiaries and may be called a conduit trust
Correct Answer Simple Trust
A written document by which one person (principal) empowers
another person to act on his or her behalf in situations that may
or may not involve incapacity Correct Answer Power of
Attorney
Access to the death benefit of a life insurance policy while still
alive even if person is not terminally ill Correct Answer Life
settlement
Administrative interpretation / may be cited as precedent
Correct Answer Revenue rulings and revenue procedures
Advantages of S Corporations Correct Answer Limited
Liability
Conduit Income or loss to owner with losses up to basis limited
Basis equals cash contributed plus direct loans made by the
shareholder to the corporations
After-Tax Yield Formula Correct Answer After-tax yield =
Rate on the taxable bond * (1 － Tax rate)
, Also called inflation risk, and it occurs when rising prices of
goods and services erode purchasing power Correct Answer
Purchasing power risk
Also known nondiversifiable risk, it is inescapable because no
matter how well the investor diversifies, the risk of the overall
market cannot be avoided Correct Answer Systematic Risk
Amount given for the American Opportunity Credit Correct
Answer $2,500/student maximum first four years of college
(100% of first $2,000 of qualified education expense and 25% of
the next $2,000)
Amount given for the Lifetime Learning Credit Correct Answer
$2,000 maximum for undergraduate/graduate student
AMT Add Back Items Correct Answer Incentive stock option
bargain elements
property, state, and city income taxes
AMT Preference Items Correct Answer IPOD
Excess Intangible Drilling Costs
Private Activity municipal bonds
Oil and gas percentage depletion - but not cost depletion
Depreciations (ACRS/MACRS) - bot not straight line
An immediate and heavy need with no other resources
reasonably available to meet this need Correct Answer 401k
Hardship Withdrawal
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