2024 CRPC Exam Test Bank New Latest Version with All Questions from Actual Exam and 100% Correct Answers and Rationale
2024 CRPC Exam Test Bank New Latest Version with
All Questions from Actual Exam and 100% Correct
Answers and Rationale
Juan, age 44, contributed $4,000 per year to his Roth IRA since opening it three years
ago. Last year he converted $10,000 into his Roth IRA from his traditional IRA. This
year he was forced to withdraw $25,000 to help his sister. Juan is in the 22% federal tax
bracket. How much will he owe the federal government for this distribution?
A)$8,000
B)$1,960
C)$960
D)$660 ——- Correct Answer ——– –B
The first $12,000 is allocated to his contributions. This money is neither income taxed
nor penalized, ever. Next comes the conversion money. It is not income taxed, but it is
subject to the 10%
The continuing evolution of investment advice and the regulation surrounding it will most
likely lead to:
A)increased client expectations of advisers and downward pressure on fees.
B)minimal impact on client expectations of advisers or on any fees being charged.
C)less and less government involvement with the financial services industry.
D)decreased client expectations of advisers and fees will stay about the same. ——–
Correct Answer ——– –A
The bar is being raised because the fiduciary standard is a higher standard than the
suitability standard. This will increase client expectations of advisers and put downward
pressure on fees, especially high fee products that have better, lower fee alternatives
available. There is very little chance the government will be less involved over time.
Homer and Marge are married. Homer died in 2020 at age 66. Marge is his sole
beneficiary for his IRA. What is/are Marge’s option(s) for handling the required minimum
distributions (RMDs) from his IRA assets?
I.Marge must begin distributions in the year following the year Homer died.
II.Marge can move Homer’s account into her previously existing IRA. She will not be
subject to RMDs until she reaches age 72.
III.Marge’s only option is to have the account totally distributed by December 31 of the
year with the 10th anniversary of Homer’s death.
IV. Marge can move Homer’s IRA into an inherited IRA. She would have to start RMDs
when Homer would have been 72. ——– Correct Answer ——– II & III
Marge must begin distributions in the year following the year Homer died.
Marge can move Homer’s account into her previously existing IRA. She will not be
subject to RMDs until she reaches age 72.
Marge’s only option is to have the account totally distributed by December 31 of the
year with the 10th anniversary of Homer’s death.
Marge can move Homer’s IRA into an inherited IRA. She would have to start RMDs
when Homer would have been 72.
LTC ——– Correct Answer ——– Payments from a qualified LTC policy are income taxfree up to the per-day limit for policies that pay per diem benefits. The per-day cap on
tax-free LTC benefits cannot exceed $390 (for 2020). While many LTC policies cover all
levels of care, many provide only for home care or exclude any care provided outside of
a long-term care facility. Policies sold in states that have adopted the National
Association of Insurance Commissioners’ Long-Term Care Insurance Model Regulation
must cover Alzheimer’s. Although medical screening might prevent a person with
Alzheimer’s disease from purchasing an LTC policy, it cannot prevent a healthy person
from purchasing an LTC policy in states that have adopted the model regulation (i.e., a
qualified policy). Medicare is not much help in financing long-term care; it covers
relatively intense care during a brief period of convalescence that follows a covered
hospital stay.
If an investor wants to accumulate $250,000 over the next 12 years, can invest $8,000
at the end of each year, and expects to earn an 11% compound return over the 12
years, what lump sum must she deposit today in the investment to meet her goal? ——-
- Correct Answer ——– $19,521
The correct calculator inputs are $8,000, +/-, [PMT]; 11 [I/YR] 12 [N]; $250,000 [FV];
solve for PV = $19,521.
To understand the long-term care (LTC) market, a financial planner must be familiar
with the wide array of financial products designed to serve the unique needs of this
market. As such, which one of the following statements is correct?
A) Payments from a qualified LTC policy paying up to an annually adjusted per-day limit
for charges from an LTC facility will be income tax free.
B) Policies issued today generally require an individual to be eligible for Medicare
nursing home benefits prior to receiving any insurance policy benefits.
C) Because of medical screening, healthy people without a preexisting condition who
want to purchase LTC now but may potentially suffer from Alzheimer’s disease in the
future cannot obtain a qualified LTC policy.
D) Practically all current long-term care policies provide for all levels of care-skilled,
intermediate, custodial, and/or home care-if the patient needs assistance with two of t —
—— Correct Answer ——– –A
Payments from a qualified LTC policy are income tax-free up to the per-day limit for
policies that pay per diem benefits. The per-day cap on tax-free LTC benefits cannot
exceed $390 (for 2020). While many LTC policies cover all levels of care, many provide
only for home care or exclude any care provided outside of a long-term care facility.
Policies sold in states that have adopted the National Association of Insurance
Commissioners’ Long-Term Care Insurance Model Regulation must cover Alzheimer’s.
Although medical screening might prevent a person with Alzheimer’s disease from
purchasing an LTC policy, it cannot prevent a healthy person from purchasing an LTC
policy in states that have adopted the model regulation (i.e., a qualified policy).
Medicare is not much help in financing long-term care; it covers relatively intense care
during a brief period of convalescence that follows a covered hospital stay.
Richard wants to have an annual retirement income of $100,000 (payable at the
beginning of each year) protected against 3% inflation.
Assuming a 7% after-tax rate of return and a retirement period of 30 years, how much
money does Richard need in order to meet his goal?
Explain how you need to input this on the calculator and why. ——- Correct Answer —–
— Step One – Set the calculator to BEGIN.
Step Two – Calculate the inflation adjusted rate of return (One plus the Rate of Return
divided by One plus the interest rate, minus one, multiplied by 100 = the inflation
adjusted rate of return) Put this number in the I/YR
Step Three – 100,000 goes in as a PMT
Step Four – 30 goes in as N
Step Five -Press PV
Richard needs $1,822,042.88 in today’s dollars to meet his needs.
How do you calculate the inflation-adjusted rate of return? ——- Correct Answer ——–
1 plus the Rate of Return
Divided by
1 plus the interest rate
minus one
multiplied by 100
Tom has been promised a stream of $40,000 annual payments at the end of each year
for 25 years. The present value of these payments discounted at a rate of 5% is which
one of the following amounts? ——- Correct Answer ——– Step One – The problem
says END in it so you have to set your calculator to the END mode.
Step two – Enter the $40000 as a PMT
Step Three – Enter 25 as the N.
Step Four – Enter 5 as the I/R
Step Six – Hit PV.
$563,758
Mary Goodwin’s financial situation is as follows:
Cash/cash equivalents$15,000S
hort-term debts$8,000
Long-term debts$133,000
Tax expense$7,000
Auto note payments$4,000
Invested assets$60,000
Use assets$188,000
What is her net worth? ——– Correct Answer ——– $122,000
Assets = $263,000; liabilities = $141,000, so net worth is $122,000. Taxes and auto
note payments appear on the cash flow statement.
For the year ending December 31, XXXX, Bill Greer has the following financial
information:
Salaries$70,000Auto payments$5,000Insurance$3,800Food$8,000Credit card
balance$10,000Dividends$1,100Utilities$3,500Mortgage
payments$14,000Taxes$13,000Clothing$9,000Interest income$2,100Checking
account$4,000Vacations$8,400Donations$5,800
What is the cash flow surplus or (deficit) for Bill? ——– Correct Answer ——– $2,700
Income = $70,000 + $1,100 + $2,100 = $73,200. Expenses = $5,000 + $3,800 + $8,000
- $3,500 + $14,000 + $13,000 + $9,000 + $8,400 + $5,800 = $70,500, so there is a
surplus of $2,700. The checking account and credit card balances would be on the
statement of financial position.
Which of the following are correct statements about income replacement percentages? –
——- Correct Answer ——– II, III, and IV
The inverse of Option I is true. Those with a lower preretirement income typically need a
much higher income replacement percentage in retirement.
If Tom and Jenny want to save a fixed amount annually to accumulate $2 million by
their retirement date in 25 years (rather than an amount that grows with inflation each
year), what level annual end-of-year savings amount will they need to deposit each
year, assuming their savings earn 7% annually? ——– Correct Answer ——– $31,621
Set calculator “End” and “1 P/Yr” Inputs: FV = 2000000, i = 7, N = 25, PV = 0, then Pmt
= $31,621
Bill and Lisa Hahn have determined that they will need a monthly income of $6,000
during retirement. They expect to receive Social Security retirement benefits amounting
Powered by https://learnexams.com/search/study?query=