Free CFP Questions – Retirement Savings and Income Planning

CFP SAMPLE QUESTIONS

Do you recall your last CFP exam attempt in which you got poor scores due to a few careless errors? Do you think was it possible to avoid such blunders at the time? Yes, you could have avoided making those errors. When you solve a CFP practice question, you actually become aware of the errors you make and have the opportunity to correct them before taking your actual Certified Financial Planner exam.

Solve these ten sample CFP questions from the subject – Retirement Savings and Income Planning by CFP Exam Prep by Achieve to analyze your weakness.

Q 1. When does the phaseout for single taxpayer’s Roth IRA contributions begin in 2022? 
A. $129,000
B. $130,000
C. $140,000
D. $150,000
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Q2. Which of the following are permitted investments in an IRA?
A. A mutual fund that invests exclusively in a silver mining stock
B. Gold coins minted in the US
C. A REIT
D. All of the above can be purchased in an IRA.
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Q 3. Only one of the following statements about nonqualified deferred compensation plans is valid.
A. Provides executives with “customized” retirement plans
B. Avoids qualified plan nondiscrimination rules
C. Can provide retirement benefits in excess of qualified plan limits
D. Deferred amounts are subject to income tax when the benefit is promised
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Q 4. A married couple files taxes jointly. The husband works as a carpenter and makes $35,000 per year. He does not participate in an employer-sponsored retirement plan. As an attorney, the wife earns $110,000 and contributes to her company’s retirement plan. Their annual modified adjusted gross income is $145,000. Which of the following claims about traditional and Roth IRAs is correct?  
A. The wife can make either a deductible contribution to a traditional IRA or a contribution to a Roth IRA.
B. The wife can make a deductible contribution to a Roth IRA.
C. The husband can make either a deductible or nondeductible contribution to a traditional IRA.
D. The husband cannot make contributions to a Roth IRA.
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Q 5. Which of the following statements concerning a Roth IRA contribution made this year is correct for a 32-year-old taxpayer with a modified adjusted gross income (MAGI) of $45,000?
A. The contribution is tax deductible if the taxpayer does not participate in an employer’s qualified retirement plan.
B. Required minimum distributions must be taken no later than April 1 of the year following the year in which the taxpayer turns age 70½ .
C. The contribution can be made even if the taxpayer participates in an employer’s qualified retirement plan.
D. After five years have elapsed, distributions in excess of basis are not subject to income tax if the money is used to pay college tuition.
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Q 6. This year, a 46-year-old customer will earn $65,000 after leaving from her accounting job last year and starting a teaching profession. Which of the following amounts is the maximum allowed contribution the client can make to a tax-sheltered annuity?
A. $13,200
B. $20,500
C. $22,000
D. $25,000
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Q 7. Penalty-free distributions from an IRA for a first-time home purchase must be used within______ of the money being withdrawn.
A. 30 days
B. 60 days
C. 90 days
D. 120 days
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Q 8. Greyson, age 53, recently quit his job. He would like to distribute money from his 401(k) but wants to avoid any penalties related to the distribution. If he waits a minimum of________ years, his distribution will not be subject to the_________ premature distribution penalty.
A. 2; 10%
B. 2; 15%
C. 6; 15%
D. 6; 20%
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Q 9. To earn current income, a retired client wants to invest the profits of a maturing certificate of deposit (CD). The client and his spouse are confident that their heirs would be adequately catered for without the CD funds. Which of the following would generate the most after-tax income while also minimizing estate taxes? 
A. A single premium deferred annuity (SPDA)
B. A laddered portfolio of municipal bonds
C. An equity income mutual fun
D. A joint and survivor immediate annuity
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Q 10. A client owns 100% of Elx Corporation, a mature business worth $180 million with 773 employees. Estate and succession planning is becoming a concern for the client because Elx is expected to have a high growth rate, he is looking to retire within five years, and he will need to replace his income in retirement. He has three adult children, all executives at Elx, and he would like to transfer the value of Elx to his children. Which strategy would best help the client accomplish his goals?
A. Grantor retained annuity trust 
B. Outright gift
C. Charitable remainder trust
D. Phantom stock
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Knowing your mistakes might help you design an effective plan for dealing with tough CFP questions. You should always focus on self-evaluation if you want to know where you are falling short. It also aids in the development of a strategy for reaching your objectives. Overall, practicing CFP test questions with detailed explanations from the CFP Exam Prep by Achieve is an excellent method to prepare for your D-day. Download now for 1900+ subject-wise CFP review questions.