Question 1

What type of IRA is not subject to minimum distribution rules until the death of the owner?

Accepted Answer

A) Traditional IRA 
B) Roth IRA 
C) Kipling IRA 
D) Retirement IRA

Question 2

Beth is the most optimistic and altruistic client you've ever had. She saves 10 percent of her income weekly and her living expenses only take-up 30 percent of her pay; the rest is given to charity. She wants to retire early and maintain her current lifestyle. What option would you suggest to have her save more income to meet her financial needs?

Accepted Answer

A) Become fully insured. 
B) Take a second job. 
C) Reduce charitable contributions. 
D) Inform her that retiring early and maintaining her lifestyle is perfectly doable.

Question 3

What is the amount of income tax withheld (by the plan sponsor or company) on an IRA or qualified plan?

Accepted Answer

A) 5% 
B) 10% 
C) 20% 
D) 25%

Question 4

What is a factor that you and the client CANNOT control?

Accepted Answer

A) Age at retirement 
B) Returns on investments 
C) Inflation rates 
D) Income and expense needs

Question 5

When it comes to retirement plans, what is true of IRC Section 72 (t) for tax-advantaged personal retirement plans?

Accepted Answer

A) The owner can remove funds at any time. 
B) Early withdrawal has a 10 percent penalty. 
C) There is no triggering event needed for withdraw. 
D) All of the above.

Question 6

How many days does Medicare cover at a skilled nursing facility?

Accepted Answer

A) First 100 days 
B) Last 100 days 
C) First 30 days 
D) Last 30 days

Question 7

Cash balance plans are defined benefit plans with features similar to those of a defined contribution plan however, there are a few exceptions. What is a difference is particular to a cash balance plan?

Accepted Answer

A) The use of the Pension Benefit guaranty Corporation. 
B) That retirement benefits/distributions are not adjusted for cost of living. 
C) Plan is not portable. 
D) None of the above.

Question 8

Properly planning for Medicaid involves understanding which of the following?

Accepted Answer

A) Tax planning 
B) Retirement savings and income planning 
C) Estate planning 
D) All of the above

Question 9

Which of the following is true regarding Medicaid?

Accepted Answer

A) Medicaid is a health insurance program specifically designed for retirees 
B) The laws enacting Medicaid were signed in 1985 
C) Medicaid is designed to be run at the state level 
D) The Affordable Care Act provided less federal funding to most states

Question 10

Rick loves only half of his employees and hates the rest. He is considering offering a qualified retirement plan, but doesn't want to give it to the employees he hates. As his financial advisor, you remind him:

Accepted Answer

A) That employers are allowed an immediate tax deduction for amount contribute 
B) That the employees that he loves will love him back for not having to pay income taxes on the amount they contribute to their savings. 
C) Both A and B 
D) Neither A nor B

Question 11

Becky's parents have died in a car crash, she is five. Her grandparents are 59 years old and now care for her. Granddad is considering taking on some work to earn a little extra money. He is wondering how an extra job may affect the benefits they receive for Becky's care, what do you tell him about working?

Accepted Answer

A) Any type of work will stop benefit eligibility. 
B) As long as he earns less than $7,005 per year, he is eligible for benefits. 
C) As long as he earns less than $14,160 per year, he is eligible for benefits. 
D) He is eligible for benefits regardless of the amount of income he earns.

Question 12

During a divorce, who determines child support?

Accepted Answer

A) Financial Planner 
B) Parents 
C) Courts 
D) Lawyers

Question 13

Which of the following is NOT a type of IRA?

Accepted Answer

A) SEP 
B) SIMPLE 
C) Roth 
D) Qualified pension

Question 14

After calculating a comprehensive income-need analysis for Martha and Matt, you realize they need to start saving $100,000 per year to retire like Madonna will. What for projected cash-flow shortfall compensation strategy would you not suggest?

Accepted Answer

A) Decrease current and future expenditures 
B) Advance the retirement age 
C) Accept higher risk levels for investments 
D) Consider level annual payments instead of serial annual payments

Question 15

There are several types of retirement plans that either contribution or defined plans. What are three-year vesting contribution and five-year vesting benefit plans referred to as for qualified plan vesting schedules?

Accepted Answer

A) Palate Vesting 
B) Bi-year Vesting 
C) Cliff Vesting 
D) Scheduled Vesting

Question 16

At what age can a taxpayer withdraw amounts from IRAs without incurring an early withdrawal penalty?

Accepted Answer

A) 50 ½ 
B) 59 ½ 
C) 65 
D) 70

Question 17

The Pension Benefit Guaranty Corporation may terminate a plan for what reason (s)?

Accepted Answer

A) Plan has too many members. 
B) Plan has too many managers. 
C) Plan has become top-heavy. 
D) None of the above.

Question 18

What is screening?

Accepted Answer

A) A process where an uninformed party requests additional information from the informed party 
B) The active conveyance of information by the party with more knowledge 
C) Creating a filter of transferring knowledge by using a third party 
D) Performing background checks on another party

Question 19

Medicaid eligibility is based on certain guidelines. In general, which of the following is NOT one of those guidelines?

Accepted Answer

A) Past Medicaid contributions 
B) Household income 
C) Disability status 
D) Family status

Question 20

What is a distinguishing feature of a cash balance plan?

Accepted Answer

A) Low administration costs. 
B) Not covered by Pension Benefit Guaranty Corporation. 
C) Separate accounts are established for each participant. 
D) Investment risk rests on employee.

Exam 6: Retirement Savings and Income Planning