Foundations of Retirement Planning part 2 final

Question 0

All of the following statements concerning SIMPLEs are correct EXCEPT

A] They replaced SARSEPs
B] Employees are 100% vested in contributions to SIMPLEs
C] SIMPLEs are not subject to nondiscrimination testing
D] In-service withdrawals are not permitted

Answer 0

D] In-service withdrawals are not permitted

Question 1

All of the following statements concerning nonqualified retirement plans are correct EXCEPT

A] They usually are required to comply with all of the burdensome requirements of ERISA
B] They give employers greater flexibility in selcting whom to cover
C] They provide employers with greater flexiability in designing vesting requirements
D] They enable owners and key employees to supplement their retirement income from qualified plans, which is limited by the current tax laws

Answer 1

A] They usually are required to comply with all of the burdensome requirements of ERISA

Question 2

A distribution from a profit-sharing plan is eligible to be invested in a rollover IRA for all of the following reasons EXCEPT

A] death of the participant
B] termination of the participant’s employment
C] retirement of the participant
D] withdrawal due to illness

Answer 2

D] withdrawal due to illness

Question 3

Which of the following statements concerning early retirement is correct?

A] tax law allows an employee to withdraw money from a qualified plan without penalty if retirement prior to age 55 is mandatory
B] defined benefit plans that limit the monthly maximum benefit actually encouraged early retirement
C] an employee covered under a defined benefit plan is not penalized for retiring early
D] lump-sum payouts at early retirement are allowed only in 401 [K] plans

Answer 3

B] defined benefit plans that limit the monthly maximum benefit actually encouraged early retirement

Question 4

Which of the following types of medical expense insurance options are available to a person retiring before age 65 from a company where he or she has previously worked?

A] most retiring employees will qualify for an 18 month extension of their employer’s health coverage under COBRA provisions for the cost of the premium plus a small administrative fee
B] most retiring employees will qualify for an 18 month extention of their employer’s health coverage under COBRA provisions, if the employer pays the premiums
C] the individual is eligible for Medicare if totally retired
D] the individual is eligible for Medicare and health coverage under COBRA provisions

Answer 4

A] most retiring employees will qualify for an 18 month extension of their employer’s health coverage under COBRA provisions for the cost of the premium plus a small administrative fee

Question 5

According to the American Council of life insurance, how are life-insurance proceeds most often paid?

A] lump sum
B] life income
C] fixed-period Annuity
D] fixed amount annuity

Answer 5

A] lump sum

Question 6

Which of the following statements concerning the taxation of Social Security benefits is correct?

A] interests on deferred annuities count toward determining the taxable benefit amount
B] 100% of a retiree’s Social Security benefits are subject to taxation
C] the first dollar of a retiree’s unearned income is subject to the tax
D] taxation of up to 85% of social security benefits is possible

Answer 6

D] taxation of up to 85% of social security benefits is possible

Question 7

Which of the following statements regarding working with retiring employees is [are] correct?

One. Retirement means change- psychological, social, and financial
Two. Even individuals for financially prepared are sometimes anxious about retirement because the do not really know what to expect

A] one only
B] two only
C] both one and two
D] neither one nor two

Answer 7

C] both one and two

Question 8

Which of the following statements regarding distributions from qualified retirement plans is [are] correct?

One. Defined contribution plans guarantee a fixed monthly amount at retirement set by a formula based on salary levels and years of service
Two. Minimum distribution requirement rules effect the timing and amount of distributions from defined benefit plans, as well as traditional IRAs

A] one on the
B] two only
C] both one and two
D] neither one nor two

Answer 8

C] both one and two

Question 9

Retirement planning considerations of strategies include which of the following?

One. Retired homeowners who are running out of money might consider selling the home home, taking a home equity loan, or obtaining a reverse mortgage
Two. The death benefit during the anniitization (payout) phase makes the immediate annuity income a compelling retirement income strategy

A] one only
B] two only
C] both one and two
D] neither one nor two

Answer 9

C] both one and two

Question 10

Reasons most frequently cited for earlier than planned retirement include all of the following EXCEPT

A] health problems or disability becomes an issue
B] corporate downsizing or closure has occurred
C] the retiring employee wants to begin collecting social security benefits
D] conditions in the workplace become intolerable

Answer 10

C] the retiring employee wants to begin collecting social security benefits

Question 11

All of the following are reasons typically cited against retiring EXCEPT

A] pensions are often adjusted downwards
B] early retirement means increase exposure to inflation
C] early retirement may increase the amount of Social Security benefits paid
D] early retirement mean mean the loss of health insurance

Answer 11

C] early retirement may increase the amount of Social Security benefits paid

Question 12

All of the following our steps in developing retirement planning solutions EXCEPT

A] Identify client goals and objectives
B] assess the current retirement plan
C] outline recommendations
D] present an action plan

Answer 12

D] present an action plan

Question 13

If a 63 year old person works after Social Security retirement payments begin and he or she earns wages above an annual published limit, which of the following will happen to his or her early retirement benefits?

A] they will be reduced one dollar for each two dollars earned in the year Social Security retirement payments begin
B] they will be fully taxable at the capital gains rate
C] they will automatically terminate at age 70
D] nothing will happen to them

Answer 13

A] they will be reduced one dollar for each two dollars earned in the year Social Security retirement payments begin

Question 14

Under which of the following circumstances may an individual who retires before is 55 withdraw money from an IRA without tax penalty?

A] retirement is involuntary
B] a family member is totally and permanently disabled
C] money is distributed to someone other than the IRA owner
D] withdrawals are made as a series of substantially equal payments

Answer 14

D] withdrawals are made as a series of substantially equal payments

Question 15

Which of the following describes the main concern in the post-retirement mentality syndrome?

A] desire to maintain a comfortable lifestyle
B] possibility of requiring long-term care
C] need for estate planning
D] irrational fear of running out of money

Answer 15

B] possibility of requiring long-term care

Question 16

Which of the following life insurance settlement options is the simplest and most flexible?

A] interest option
B] life income option
C] fix period Option
D] fixed amount option

Answer 16

A] interest option

Question 17

Which of the following statements about early retirement offers is [are] correct?

One. Companies are required to offer severance pay
Two. Companies often use early retirement offers as a cost-effective way to reduced their workforce

A] one only
B] two only
C] both one and two
D] neither one nor two

Answer 17

B] two only

Question 18

Which of the following statements concerning the effect that unearned income has on Social Security benefits is [are] correct?

One. It lowers the monthly benefit payable to a retiree
Two. It may cause the benefit to become partially income taxable

A] one only
B] two only
C] both one and two
D] neither one nor two

Answer 18

D] two only

Question 19

Which of the following statements regarding retirement is [are] correct?

One. Someone who works for multiple employers usually fares better at retirement than the employee who works for a single employer
Two. Retirement is accompanied by financial, psychological, and social changes

A] one only
B] two only
C] both one and two
D] neither one nor two

Answer 19

B] two only

Question 20

All of the following statements concerning severance pay are correct EXCEPT

A] it is not subject to FICA tax
B] it is often based on years of service
C] it is subject to federal income taxation
D] it can be used as a cash incentive to retire early

Answer 20

A] it is not subject to FICA tax

Question 21

All of the following are frequently utilized selling/planning opportunities when working with early retirees EXCEPT

A] investment of severance pay a lump sums
B] IRA rollovers of qualified account money
C] purchase of disability income insurance
D] purchase of insurance coverage

Answer 21

C] purchase of disability income insurance

Question 22

All of the following strategies that homeowners can use to provide additional income at retirement EXCEPT

A] obtain a reverse mortgage
B] acquiring a home equity loan
C] paying off the existing mortgage
D] selling the home

Answer 22

C] paying off the existing mortgage

Question 23

The reason companies require beneficiaries to have insurable interest in the insured is to

A] comply with ERISA
B] comply with community property statutes
C] simplify paperwork when a claim is filed
D] prevent someone from purchasing insurance for speculative purposes

Answer 23

D] prevent someone from purchasing insurance for speculative purposes

Question 24

Many beneficiary designations are made on a per capita basis. What this means is

A] beneficiaries are usually identified by class, and benefits are divided among living members of the class
B] beneficiaries are named and can only share the death benefit equally
C] the primary beneficiary will receive benefits only if the contingent beneficiary is deceased
D] the beneficiary designation cannot be changed

Answer 24

A] beneficiaries are usually identified by class, and benefits are divided among living members of the class

Question 25

Individually owned life insurance policy proceeds pass to a named beneficiary by

A] right of survivorship
B] right of contract
C] means of probate
D] means of intestacy law

Answer 25

B] right of contract

Question 26

Which of the following describes the probate process?

A] it is the process of substituting for a will
B] it is the legal process of validating a will
C] it is the process of transferring all property at death, including assets held jointly with rights of survivorship
D] it is the process the state uses to distribute property not covered by a valid will

Answer 26

B] is the legal process of validating a will

Question 27

Which of the following statements best describes the applicable credit amount?

A] it is a lifetime credit that applies to gift and estate taxes
B] it is that applicable to gifts of present value only
C] it is available to married couples only
D] it is calculated only after death

Answer 27

A] it is a lifetime credit that applies to gift and estate taxes

Question 28

Income in respect of a defendant is subject to which of the following types of tax?

One. Estate tax
Two. Income tax [but with a deduction equal to the estate tax paid]

A] one only
B] two only
C] both one and two
D] neither one nor two

Answer 28

C] both one and two

Question 29

Which of the following statements concerning a testamentary Trust is [are] correct?

One. It is also known as a living trust
Two. It is created during the lifetime of the grantor

A] one only
B] two only
C] both one and two
D] neither one nor two

Answer 29

D] neither one nor two

Question 30

Which of the following most accurately describes how the insurance industry is regulated?

One. It is regulated but in national Association of insurance commissioners [NAIC]
Two. It is the primaryly regulated by the individual states

A] one only
B] two only
C] both one and two
D] neither one nor two

Answer 30

B] two only

Question 31

In applying the highest standard of ethical conduct to everyday business dealings with prospects and clients, an advisors should do all of the following EXCEPT

A] help prospects identify and implement all the steps that will help them accomplish their goals
B] meet the legal and ethical standards of the insurance and financial services industry
C] bend the rules every know and then if it benefits the prospect or client
D] have a thorough understanding of his or her products, the problems prospects and clients face, andthe solutions his or her products can provide

Answer 31

C] bend the rules every know and then if it benefits the prospect or client

Question 32

All of the following statements regarding the regulation of securities are correct EXCEPT

A] the main responsibility for regulating securities products rest clearly with the federal government
B] merely dealing with a security meet someone an investment advisor
C] to sell securities products, and advisor must be properly registered with the financial Industry regulator authority [FINRA]
D] continuing affiliation with a broker/dealer is required to maintain a series 7 registration

Answer 32

B] merely dealing with a security meet someone an investment advisor

Question 33

Which of the following statements regarding the estate tax marital deduction is correct?

A] it is specified amount that is indexed for inflation
B] it is a specified amount that is increased by legislative action
C] it can be applied to 50% of the deceased’s estate
D] it is an unlimited amount

Answer 33

D] it is an unlimited amount

Question 34

The person creating a trust is known as which of the following?

A] grantor
B] corpus
C] trustee
D] trust officer

Answer 34

A] grantor

Question 35

Which of the following is the correct term for federal taxes that are imposed on the transfer of property at death?

A] accumulated earnings tax
B] inheritance taxes
C] Estate taxes
D] income taxes

Answer 35

C] Estate taxes

Question 36

Estate and gift taxes are offset by a cumulative credit referred to as the

A] Annual exclusion amount
B] Marital deduction
C] applicable credit amount
D] unlimited amount

Answer 36

C] applicable credit amount

Question 37

Which of the following best describes an advisor’s professional and ethical responsibility to prospects?

A] to conduct him or herself in compliance with the law and nothing more
B] to assist prospect in presenting medical information in the most favorable light
C] to help the prospect determine and carry out the best solutions available to meet his or her retirement planning needs
D] to keep information received from the prospect in confidence from the home office

Answer 37

C] to help the prospect determine and carry out the best solutions available to meet his or her retirement planning needs

Question 38

A financial advisor may be required to register as a registered investment advisor if which of the following is [are] answered in the affirmative?

One. Does the financial advisor provide advice or analysis about securities?
Two. Is the financial advisor registered with FINRA to sell securities?

A] one only
D] two only
C] both one and two
D] neither one nor two

Answer 38

A] one only

Question 39

Which of the following situations concerning the change of an irrevocable beneficiary designation in a life insurance policy is [are] correct?

One. If the irrevocable beneficiary dies before the insured, the policy owner has the right to name a new beneficiary
Two. If the policyowner wants to change the irrevocable beneficiary, he or she has the contractual right to do so without the beneficiary’s consent

A] one only
D] two only
C] both one and two
D] neither one nor two

Answer 39

A] one only

Question 40

All of the following are ways to transfer property at death EXCEPT

A] by will
B] by gift
C] by right of survivorship
D] by right of contract

Answer 40

B] by gift

Question 41

All of the following are currently allowable credits or deductions that reduce the amount of the estate tax due EXCEPT

A] the applicable credit amount
B] deduction for administrative expenses
C] standard deduction based on filing status
D] credit for foreign death taxes paid

Answer 41

C] standard deduction based on filing status

Question 42

All of the following are basic techniques to achieve estate and gift tax reduction EXCEPT

A] create tax-exempt wealth
B] divide the state
C] discount the state tax obligation
D] avoid using annual gift tax exclusions

Answer 42

D] avoid using annual gift tax exclusions