Chartered Retirement Planning
Counselor (CRPC) Examination
Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
Q&A | Instant Download Pdf
Question 1
A client, age 55, has a current salary of $100,000 and expects to retire at age 65.
They anticipate needing 80% of their pre-retirement income in retirement, and
they expect Social Security to cover 25% of that need. Using the capital
preservation approach, if their retirement is expected to last 30 years and they
can earn a real return of 4%, what is the approximate capital needed at retirement
to fund this shortfall, assuming the shortfall is received at the beginning of each
year?
A. $600,000
B. $780,000
C. $900,000
D. $1,200,000
**_Correct Answer: D. The pre-retirement income need is $80,000 (80% of
$100,000). Social Security covers $20,000 (25% of $80,000), leaving an annual
shortfall of $60,000. The capital preservation approach calculates the present
value of an annuity due for 30 years at 4%. The formula for the present value of an
annuity due is PV = PMT × [(1 - (1 + r)^-n) / r] × (1 + r). Plugging in the numbers: PV
= $60,000 × [(1 - (1.04)^-30) / 0.04] × 1.04. (1.04)^-30 is approximately 0.3083.
This gives a factor of (1 - 0.3083)/0.04 = 17.2925. Multiplying by 1.04 yields
17.984. $60,000 × 17.984 = $1,079,040, which is closest to $1,200,000 when
considering that the capital preservation approach often uses a more conservative
,calculation or includes inflation. The key is to understand the methodology; the
closest answer is D._**
Question 2
A client is considering a Roth IRA conversion. They are currently in the 24% tax
bracket and expect to be in the 32% bracket in retirement. They have a traditional
IRA worth $200,000. Which of the following is the most accurate statement
regarding the conversion?
A. The conversion is not advisable because it will trigger a 10% early distribution
penalty.
B. The conversion is advisable because they will pay taxes at a lower rate now
compared to their expected future rate.
C. The conversion is advisable only if they pay the conversion taxes with funds
from the IRA itself.
D. The conversion is not advisable because Roth IRA distributions are always
taxable.
Correct Answer: B. Converting a traditional IRA to a Roth IRA is generally
advantageous when the current tax rate is lower than the expected future tax
rate. Here, the client is in the 24% bracket now and expects to be in the 32%
bracket later, so paying taxes now at 24% is beneficial. A conversion does not
trigger a 10% penalty; it is a taxable event, not a distribution. Paying taxes with
IRA funds is generally not advisable as it reduces the retirement nest egg and
may trigger penalties if under age 59½. Roth IRA qualified distributions are tax-
free, not taxable.
Question 3
Under the SECURE Act, which of the following is true regarding the required
beginning date (RBD) for required minimum distributions (RMDs) from a qualified
retirement plan?
A. The RBD is April 1 following the year the participant turns age 70½.
B. The RBD is April 1 following the year the participant turns age 72.
C. The RBD is April 1 following the year the participant turns age 73.
D. The RBD is December 31 of the year the participant turns age 72.
Correct Answer: C. The SECURE Act raised the RMD age to 73 for individuals who
,turn 73 after January 1, 2023. The RBD is April 1 of the year following the year
the participant attains age 73. The SECURE 2.0 Act further increased this to 75
for those turning 75 after 2033, but the current RBD for most is 73. Option B is
the previous rule, and option D is incorrect as the RBD is not December 31; that
is the deadline for the first distribution year.
Question 4
A client has a 401(k) plan with a loan outstanding. They are leaving their employer.
What is the primary consequence if they do not repay the loan within the
required time frame?
A. The outstanding balance is treated as a distribution and is subject to income tax
and potentially a 10% early distribution penalty.
B. The outstanding balance is treated as a distribution but is not subject to penalty
if they are over age 55.
C. The outstanding balance is forgiven and becomes a tax-free gift.
D. The outstanding balance can be rolled over to an IRA to avoid taxation.
Correct Answer: A. If a 401(k) loan is not repaid upon separation from service,
the outstanding balance is deemed a distribution. This amount is subject to
ordinary income tax and, if the participant is under age 59½, a 10% early
distribution penalty. Option B is incorrect because the age 55 exception applies
to distributions from a qualified plan upon separation from service, but it does
not apply to deemed distributions from loans. Option C is false, and option D is
incorrect because a loan balance cannot be rolled over.
Question 5
Which of the following is a characteristic of a defined benefit pension plan
compared to a defined contribution plan?
A. The employer bears the investment risk.
B. The employee bears the investment risk.
C. Contributions are fixed and determined by the employee.
D. The benefit is based solely on employee contributions.
Correct Answer: A. In a defined benefit plan, the employer promises a specific
benefit at retirement, and the employer bears the investment and longevity risk.
The benefit is typically based on a formula using salary and years of service, not
, solely on contributions. In a defined contribution plan, the employee bears the
investment risk, and contributions are often fixed or determined by the plan.
Question 6
A client is considering a "stretch IRA" strategy for their beneficiaries. Under the
SECURE Act, which of the following is true for most non-eligible designated
beneficiaries?
A. They can stretch distributions over their own life expectancy.
B. They must withdraw the entire account balance within 10 years of the original
owner's death.
C. They must withdraw the entire account balance within 5 years of the original
owner's death.
D. They are not required to take any distributions until they reach age 72.
Correct Answer: B. The SECURE Act eliminated the "stretch IRA" for most non-
eligible designated beneficiaries. These beneficiaries must now withdraw the
entire inherited IRA balance by the end of the 10th calendar year following the
year of the original owner's death. Option A is the pre-SECURE Act rule. Option C
is the rule for certain trusts or if no designated beneficiary exists. Option D is
incorrect as RMDs for beneficiaries do not follow the owner's RMD schedule.
Question 7
When calculating a client's "human capital" for retirement planning purposes,
which of the following factors is the most critical to quantify?
A. The client's current net worth.
B. The present value of the client's future earnings.
C. The client's current annual expenses.
D. The client's home equity.
Correct Answer: B. Human capital represents the present value of a person's
future earnings potential. It is the foundation for determining how much they
can save and invest for retirement. Net worth, expenses, and home equity are
important but are not the definition of human capital. The concept of human
capital is critical in asset allocation decisions, especially for younger clients.
Counselor (CRPC) Examination
Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
Q&A | Instant Download Pdf
Question 1
A client, age 55, has a current salary of $100,000 and expects to retire at age 65.
They anticipate needing 80% of their pre-retirement income in retirement, and
they expect Social Security to cover 25% of that need. Using the capital
preservation approach, if their retirement is expected to last 30 years and they
can earn a real return of 4%, what is the approximate capital needed at retirement
to fund this shortfall, assuming the shortfall is received at the beginning of each
year?
A. $600,000
B. $780,000
C. $900,000
D. $1,200,000
**_Correct Answer: D. The pre-retirement income need is $80,000 (80% of
$100,000). Social Security covers $20,000 (25% of $80,000), leaving an annual
shortfall of $60,000. The capital preservation approach calculates the present
value of an annuity due for 30 years at 4%. The formula for the present value of an
annuity due is PV = PMT × [(1 - (1 + r)^-n) / r] × (1 + r). Plugging in the numbers: PV
= $60,000 × [(1 - (1.04)^-30) / 0.04] × 1.04. (1.04)^-30 is approximately 0.3083.
This gives a factor of (1 - 0.3083)/0.04 = 17.2925. Multiplying by 1.04 yields
17.984. $60,000 × 17.984 = $1,079,040, which is closest to $1,200,000 when
considering that the capital preservation approach often uses a more conservative
,calculation or includes inflation. The key is to understand the methodology; the
closest answer is D._**
Question 2
A client is considering a Roth IRA conversion. They are currently in the 24% tax
bracket and expect to be in the 32% bracket in retirement. They have a traditional
IRA worth $200,000. Which of the following is the most accurate statement
regarding the conversion?
A. The conversion is not advisable because it will trigger a 10% early distribution
penalty.
B. The conversion is advisable because they will pay taxes at a lower rate now
compared to their expected future rate.
C. The conversion is advisable only if they pay the conversion taxes with funds
from the IRA itself.
D. The conversion is not advisable because Roth IRA distributions are always
taxable.
Correct Answer: B. Converting a traditional IRA to a Roth IRA is generally
advantageous when the current tax rate is lower than the expected future tax
rate. Here, the client is in the 24% bracket now and expects to be in the 32%
bracket later, so paying taxes now at 24% is beneficial. A conversion does not
trigger a 10% penalty; it is a taxable event, not a distribution. Paying taxes with
IRA funds is generally not advisable as it reduces the retirement nest egg and
may trigger penalties if under age 59½. Roth IRA qualified distributions are tax-
free, not taxable.
Question 3
Under the SECURE Act, which of the following is true regarding the required
beginning date (RBD) for required minimum distributions (RMDs) from a qualified
retirement plan?
A. The RBD is April 1 following the year the participant turns age 70½.
B. The RBD is April 1 following the year the participant turns age 72.
C. The RBD is April 1 following the year the participant turns age 73.
D. The RBD is December 31 of the year the participant turns age 72.
Correct Answer: C. The SECURE Act raised the RMD age to 73 for individuals who
,turn 73 after January 1, 2023. The RBD is April 1 of the year following the year
the participant attains age 73. The SECURE 2.0 Act further increased this to 75
for those turning 75 after 2033, but the current RBD for most is 73. Option B is
the previous rule, and option D is incorrect as the RBD is not December 31; that
is the deadline for the first distribution year.
Question 4
A client has a 401(k) plan with a loan outstanding. They are leaving their employer.
What is the primary consequence if they do not repay the loan within the
required time frame?
A. The outstanding balance is treated as a distribution and is subject to income tax
and potentially a 10% early distribution penalty.
B. The outstanding balance is treated as a distribution but is not subject to penalty
if they are over age 55.
C. The outstanding balance is forgiven and becomes a tax-free gift.
D. The outstanding balance can be rolled over to an IRA to avoid taxation.
Correct Answer: A. If a 401(k) loan is not repaid upon separation from service,
the outstanding balance is deemed a distribution. This amount is subject to
ordinary income tax and, if the participant is under age 59½, a 10% early
distribution penalty. Option B is incorrect because the age 55 exception applies
to distributions from a qualified plan upon separation from service, but it does
not apply to deemed distributions from loans. Option C is false, and option D is
incorrect because a loan balance cannot be rolled over.
Question 5
Which of the following is a characteristic of a defined benefit pension plan
compared to a defined contribution plan?
A. The employer bears the investment risk.
B. The employee bears the investment risk.
C. Contributions are fixed and determined by the employee.
D. The benefit is based solely on employee contributions.
Correct Answer: A. In a defined benefit plan, the employer promises a specific
benefit at retirement, and the employer bears the investment and longevity risk.
The benefit is typically based on a formula using salary and years of service, not
, solely on contributions. In a defined contribution plan, the employee bears the
investment risk, and contributions are often fixed or determined by the plan.
Question 6
A client is considering a "stretch IRA" strategy for their beneficiaries. Under the
SECURE Act, which of the following is true for most non-eligible designated
beneficiaries?
A. They can stretch distributions over their own life expectancy.
B. They must withdraw the entire account balance within 10 years of the original
owner's death.
C. They must withdraw the entire account balance within 5 years of the original
owner's death.
D. They are not required to take any distributions until they reach age 72.
Correct Answer: B. The SECURE Act eliminated the "stretch IRA" for most non-
eligible designated beneficiaries. These beneficiaries must now withdraw the
entire inherited IRA balance by the end of the 10th calendar year following the
year of the original owner's death. Option A is the pre-SECURE Act rule. Option C
is the rule for certain trusts or if no designated beneficiary exists. Option D is
incorrect as RMDs for beneficiaries do not follow the owner's RMD schedule.
Question 7
When calculating a client's "human capital" for retirement planning purposes,
which of the following factors is the most critical to quantify?
A. The client's current net worth.
B. The present value of the client's future earnings.
C. The client's current annual expenses.
D. The client's home equity.
Correct Answer: B. Human capital represents the present value of a person's
future earnings potential. It is the foundation for determining how much they
can save and invest for retirement. Net worth, expenses, and home equity are
important but are not the definition of human capital. The concept of human
capital is critical in asset allocation decisions, especially for younger clients.
