CRPC SAMPLE TEST EXAM QUESTIONS AND
100% VERIFIED ANSWERS 2025 / GRADED A+ /
GUARANTEED PASS!!
__________ is a coherent set of guidelines for managing financial assets according
to the client's goals and the realities of the investment market.
End Investment Section
- answer-investment policy
The investment policy statement is a blueprint for the financial management
process that is aligned with the goals of the client but also in line with market
reality.
. An employee retired at the end of 2015 and is eligible to receive a benefit from
her employer's traditional defined benefit plan. Her highest consecutive annual
salaries for purposes of determining her pension benefit were $90,000, $100,000,
and $110,000, respectively, in 2013, 2014, and 2015. What is the maximum annual
benefit that may be paid to her by the plan?
- answer-$100,000
The maximum annual benefit that may be paid to her by the plan equals the lesser
of 100% of the average of her highest consecutive salaries ($100,000) or $210,000
(indexed for 2015). Therefore, the maximum annual benefit that may be paid to her
by the plan equals $100,000.
. Graham recommended that nonprofessional investors apply which of the
following rules of thumb?
- answer-Buy stocks for two-thirds or less of their net current assets
. John Wilts, age 45, is the only participant in JRW Corporation's qualified profit
sharing plan. John's compensation for the 2015 plan year is $260,000. What is the
maximum employer contribution that may be allocated to John's profit sharing plan
account for the 2015 plan year?
- answer-$53,000
Profit sharing plans limit employer contributions to 25% of plan participants' total
compensation (25% x $260,000 = $65,000); however, the annual addition to each
participant's account is limited to the lesser of 100% of compensation or $53,000
,for 2015. Annual additions include employer contributions, employee
contributions, and forfeitures. Therefore, the maximum contribution that may be
allocated to John's profit sharing account is $53,000 for 2015.
"Bridge jobs" describe periods of partial retirement for older workers. Which of the
following statements regarding bridge jobs is NOT TRUE?
- answer-They generally represent a move up the socioeconomic ladder, from less-
skilled to more-skilled jobs.
Bridge jobs generally represent a move down the socioeconomic ladder, from
more-skilled to less-skilled jobs or from white-collar to blue-collar jobs.
"Excess" earned income by Social Security beneficiaries who are under Social
Security's full retirement age
- answer-results in a partial or full loss of benefits, depending on the age of the
person, the amount of Social Security benefit, and the amount of earned income.
The following non-work sources of income do not count as wages for the earnings
test: IRA withdrawals; pension annuity payments; inheritance payments; and
dividend income.
"Golden parachute" agreements may include all of the following, except
- answer-reduced pension benefits.
Golden parachute agreements may include various combinations of cash, company
stock, medical and life insurance, extra pension benefits, and other benefits.
2015 earnings cap
- answer-$15,720
401(k)
- answer-Qualified plans, such as Section 401(k) plans, must follow strict rules
including minimum participation and coverage requirements, minimum vesting
standards, funding requirements, and certain discrimination standards. These
requirements are a part of the Internal Revenue Code, and ERISA added additional
requirements designed in favor of the employee.
401k 2015 limit
- answer-18,000
45 Test 2: Susan Reynolds, age 47, who is married and files jointly, contributes 5%
of her salary to her employer's 401(k) plan; she and her husband have modified
,AGI of $105,000. If Susan makes a full $5,500 contribution to an IRA, how much
of this contribution will be deductible in 2015?
(LO 5-2)
- answer-3,580: The following formula can be used to calculate the deductible
amount of the Susan's IRA contribution (rounded up to the nearest $10) for 2015:
UL = Upper dollar limit of the phaseout range for married individuals filing jointly
= $118,000 (for 2015)
Top of phaseout range for married filing jointly = $20,000 (for 2015)
$5,500 x [($118,000 - $105,000)/$20,000] = $3,575 Rounded to $3,580
457 plan deferrals can be paid the following participants EXCEPT
- answer-one who has just recently turned 59½.
Amounts deferred under a Section 457(b) plan cannot be paid to a participant or
beneficiary before age 70½ or termination of employment.
A ____ penalty is imposed for failing to take the required minimum distribution
(RMD).
- answer-50%
The penalty for failing to take the RMD is 50% of the difference between what
should have been taken and what was taken.
A ________ is exempt from the stringent requirements set by the Internal Revenue
Code and the Employee Retirement Security Act of 1974 (ERISA).
- answer-deferred compensation plan
Nonqualified plans, such as deferred compensation plans, are typically designed to
avoid these requirements and benefit only certain employees. Nonqualified plans
do not allow the employer to deduct the costs associated with the plan.
A _________ plan is a type of qualified plan that provides definitely determinable
benefits.
- answer-cash balance plan
A cash balance plan is a type of pension plan. All pension plans must provide for
benefits that are definitely determinable.
A "rising equity glidepath" typically will lead to a(n) equity exposure over one's
lifetime.
- answer-decreased
, The strategy of increasing equity exposure throughout retirement can result in less
equity exposure over one's lifetime due to the reduced exposure in the early years.
A bond has a duration of 8 years. If market interest rates rise by 1%, the percentage
price change of the bond is approximately
- answer-an 8% decline.
The approximate percentage price change in the bond is: 8 duration * 1% rise in
rates = -8% price move
A bond portfolio strategy that splits the portfolio between _____________ bonds is
referred to as a barbell strategy.
- answer-short-term and long-term
A barbell strategy splits the bond portion of a portfolio between short-term and
long-term bonds. Both ends may then stagger maturities similar to the ladder
strategy. For example, the short-term end may be constructed with bonds of
maturities five years or less and the long-term end may be constructed with bonds
of maturities greater than 10 years.
A cash balance pension plan
- answer-is a defined benefit plan with design features similar to a defined
contribution plan. There is generally a hypothetical account for each participant.
The annual employer contributions must reflect a uniform allocation formula based
on compensation or a flat dollar amount. When a cash balance plan provides that
the employer contribution is based upon a percentage of compensation—for
example 8%—the plan is a career average pay plan. Interest credited to
participants' "accounts" is usually specified in the plan document as a fixed rate—
for example 6%.
A characteristic of an unfunded excess Benefit Plan
- answer-Unfunded excess benefit plans need not comply with either the disclosure
or reporting requirements of erisa
a correct statement regarding Roth 401(k)s?
- answer-A Roth-only 401(k) plan is not permitted. Therefore, a 401(k)
contribution program must, at a minimum, give participants the option of making
pretax elective deferrals to the plan instead of after-tax Roth 401(k) deferrals (or
both).
A 401(k) may provide for automatic enrollment in the Roth 401(k) feature of the
plan.
100% VERIFIED ANSWERS 2025 / GRADED A+ /
GUARANTEED PASS!!
__________ is a coherent set of guidelines for managing financial assets according
to the client's goals and the realities of the investment market.
End Investment Section
- answer-investment policy
The investment policy statement is a blueprint for the financial management
process that is aligned with the goals of the client but also in line with market
reality.
. An employee retired at the end of 2015 and is eligible to receive a benefit from
her employer's traditional defined benefit plan. Her highest consecutive annual
salaries for purposes of determining her pension benefit were $90,000, $100,000,
and $110,000, respectively, in 2013, 2014, and 2015. What is the maximum annual
benefit that may be paid to her by the plan?
- answer-$100,000
The maximum annual benefit that may be paid to her by the plan equals the lesser
of 100% of the average of her highest consecutive salaries ($100,000) or $210,000
(indexed for 2015). Therefore, the maximum annual benefit that may be paid to her
by the plan equals $100,000.
. Graham recommended that nonprofessional investors apply which of the
following rules of thumb?
- answer-Buy stocks for two-thirds or less of their net current assets
. John Wilts, age 45, is the only participant in JRW Corporation's qualified profit
sharing plan. John's compensation for the 2015 plan year is $260,000. What is the
maximum employer contribution that may be allocated to John's profit sharing plan
account for the 2015 plan year?
- answer-$53,000
Profit sharing plans limit employer contributions to 25% of plan participants' total
compensation (25% x $260,000 = $65,000); however, the annual addition to each
participant's account is limited to the lesser of 100% of compensation or $53,000
,for 2015. Annual additions include employer contributions, employee
contributions, and forfeitures. Therefore, the maximum contribution that may be
allocated to John's profit sharing account is $53,000 for 2015.
"Bridge jobs" describe periods of partial retirement for older workers. Which of the
following statements regarding bridge jobs is NOT TRUE?
- answer-They generally represent a move up the socioeconomic ladder, from less-
skilled to more-skilled jobs.
Bridge jobs generally represent a move down the socioeconomic ladder, from
more-skilled to less-skilled jobs or from white-collar to blue-collar jobs.
"Excess" earned income by Social Security beneficiaries who are under Social
Security's full retirement age
- answer-results in a partial or full loss of benefits, depending on the age of the
person, the amount of Social Security benefit, and the amount of earned income.
The following non-work sources of income do not count as wages for the earnings
test: IRA withdrawals; pension annuity payments; inheritance payments; and
dividend income.
"Golden parachute" agreements may include all of the following, except
- answer-reduced pension benefits.
Golden parachute agreements may include various combinations of cash, company
stock, medical and life insurance, extra pension benefits, and other benefits.
2015 earnings cap
- answer-$15,720
401(k)
- answer-Qualified plans, such as Section 401(k) plans, must follow strict rules
including minimum participation and coverage requirements, minimum vesting
standards, funding requirements, and certain discrimination standards. These
requirements are a part of the Internal Revenue Code, and ERISA added additional
requirements designed in favor of the employee.
401k 2015 limit
- answer-18,000
45 Test 2: Susan Reynolds, age 47, who is married and files jointly, contributes 5%
of her salary to her employer's 401(k) plan; she and her husband have modified
,AGI of $105,000. If Susan makes a full $5,500 contribution to an IRA, how much
of this contribution will be deductible in 2015?
(LO 5-2)
- answer-3,580: The following formula can be used to calculate the deductible
amount of the Susan's IRA contribution (rounded up to the nearest $10) for 2015:
UL = Upper dollar limit of the phaseout range for married individuals filing jointly
= $118,000 (for 2015)
Top of phaseout range for married filing jointly = $20,000 (for 2015)
$5,500 x [($118,000 - $105,000)/$20,000] = $3,575 Rounded to $3,580
457 plan deferrals can be paid the following participants EXCEPT
- answer-one who has just recently turned 59½.
Amounts deferred under a Section 457(b) plan cannot be paid to a participant or
beneficiary before age 70½ or termination of employment.
A ____ penalty is imposed for failing to take the required minimum distribution
(RMD).
- answer-50%
The penalty for failing to take the RMD is 50% of the difference between what
should have been taken and what was taken.
A ________ is exempt from the stringent requirements set by the Internal Revenue
Code and the Employee Retirement Security Act of 1974 (ERISA).
- answer-deferred compensation plan
Nonqualified plans, such as deferred compensation plans, are typically designed to
avoid these requirements and benefit only certain employees. Nonqualified plans
do not allow the employer to deduct the costs associated with the plan.
A _________ plan is a type of qualified plan that provides definitely determinable
benefits.
- answer-cash balance plan
A cash balance plan is a type of pension plan. All pension plans must provide for
benefits that are definitely determinable.
A "rising equity glidepath" typically will lead to a(n) equity exposure over one's
lifetime.
- answer-decreased
, The strategy of increasing equity exposure throughout retirement can result in less
equity exposure over one's lifetime due to the reduced exposure in the early years.
A bond has a duration of 8 years. If market interest rates rise by 1%, the percentage
price change of the bond is approximately
- answer-an 8% decline.
The approximate percentage price change in the bond is: 8 duration * 1% rise in
rates = -8% price move
A bond portfolio strategy that splits the portfolio between _____________ bonds is
referred to as a barbell strategy.
- answer-short-term and long-term
A barbell strategy splits the bond portion of a portfolio between short-term and
long-term bonds. Both ends may then stagger maturities similar to the ladder
strategy. For example, the short-term end may be constructed with bonds of
maturities five years or less and the long-term end may be constructed with bonds
of maturities greater than 10 years.
A cash balance pension plan
- answer-is a defined benefit plan with design features similar to a defined
contribution plan. There is generally a hypothetical account for each participant.
The annual employer contributions must reflect a uniform allocation formula based
on compensation or a flat dollar amount. When a cash balance plan provides that
the employer contribution is based upon a percentage of compensation—for
example 8%—the plan is a career average pay plan. Interest credited to
participants' "accounts" is usually specified in the plan document as a fixed rate—
for example 6%.
A characteristic of an unfunded excess Benefit Plan
- answer-Unfunded excess benefit plans need not comply with either the disclosure
or reporting requirements of erisa
a correct statement regarding Roth 401(k)s?
- answer-A Roth-only 401(k) plan is not permitted. Therefore, a 401(k)
contribution program must, at a minimum, give participants the option of making
pretax elective deferrals to the plan instead of after-tax Roth 401(k) deferrals (or
both).
A 401(k) may provide for automatic enrollment in the Roth 401(k) feature of the
plan.
