CRPC PRACTICE EXAM WITH 58 QUESTIONS AND ANSWERS
A "rising equity glidepath" typically will lead to a ________ equity exposure over one's total lifetime. - -
Decreased. Remember: RISING = decrease. HIGH = Low.
-Are withdrawals from an IRA to pay for qualified expenses exempt from the 10% early withdrawal
penalty? - -Yes.
-Assume that a worker's Social Security full retirement age is 66. What percentage of the worker's full
retirement age benefits will be paid to her at age 62? - -A worker can begin receiving Social Security
retirement benefits at age 62, but at a 25% reduction from the full amount that would be received at full
retirement age 66. So 100% benefits minus the reduction of 25% = 75%.
Remember 62 = 25% reduction!
-Dan, age 58 has decided to being periodic withdrawals from his IRA. In order to avoid the 10% early
withdrawal penalty, distributions must continue until at least what age? - -Age 63. Distributions must
continue for at least five years or until the individual has reached 59.5, whichever is later.
-Financial statement ratios are part of what kind of analysis? - -Fundamental analysis.
-How do you calculate the inflation-adjusted rate of return? - -1 plus the Rate of Return
Divided by
1 plus the interest rate
minus one
multiplied by 100
-How much can a single person exclude on the sale of their home? - -Up to $250,000.00, provided the
home has been used as the principal residence for two of the previous five years.
A partial exclusion is available if the two year rule is not met due to health, job or other unforeseen
circumstances.
-How you calculate the weighted beta of a portfolio? - -You multiply the weight times the beta for each
stock, then you add those numbers up together.
-If you take a hardship distribution from your TSA, what would be the tax consequences? - -Hardship
withdrawals that are used to pay certain medical expenses would be subject to income tax but not to
the 10% tax penalty.
-In order to be considered a "qualified" policy, a long-term care policy must provide for what? - -
Nonforfeiture options, cognitive impairment must be covered, it must be guaranteed renewable and
conform to the National Association of Insurance Commissioners Model Act.
, -Intestate property passes by means of what? - -The probate process. It is NOT a will substitute. Property
that passes by the laws of intestate succession is not affected y any will provisions. Intestate succession
statues give property to many other family members before transferring it to the state.
-Moving averages, graphs and statistics regarding the supply and demand of stocks are an example of
what kind of analysis? - -Technical analysis.
-Name a few things that Medicare Part A covers. Hint: Remember; Part AH! HAhspital! - -Post-hospital
home health care - 100 home health care visits per benefit period and expenses such as in patient
hospital care, post hospital skilled nursing care, post hospital home health care, psychiatric hospital care
and blood in excess of three pints.
-Name a few things that Medicare Supplemental Insurance (Part B) provides coverage for. - -Provides
coverage for physicians services and the following that are not already covered by Part A: Home health
care, medical services, therapist, ambulances and certain costs for blood that are no covered in Part A
-Net short-term capital gains are treated as what type of income? - -Ordinary. They are subject to the
taxpayers regular marginal tax rate.
-Nick wants to maintain the purchasing power of $75,000 (in today's dollars) in retirement. If inflation
continues to average 3.5%, approximately what amount will Nick need in 20 years to equal the
purchasing power of $75,000 today? (Round your answer.) - -If you know the Rule of 72, and you divide
3.5 into 72, you arrive at the number 20, which is the number of years it will take for a sum to double.
With a calculator, you can solve for the future value of $75,000 over 20 years at 3.5%.
Keystrokes: 20 N, 3.5 I/YR, 75,000 PV, FV = $149,234; rounded = $150,000
-Over a period of 10 years, Mike contributed a total of $20,000 to a non deductible IRA. The current
value of his IRA is $32,000 and Mike, who is 50 years old, has decided to use his IRA assets to purchase a
second home. Assuming his tax bracket is 35%, how much will he owe in taxes and penalties? - -What do
you do first?
You have to remember that penalties in a non deductible IRA apply ONLY to the earnings. So $32000 -
$20000 = $12000.
Mike is only 50, so that's a 10% penalty.
Add that to his tax bracket so 35% + 10% = 45%.
$12000 x 45% = $5400 in taxes.
-Regarding longevity annuities, at what age must the owner being receiving income? - -Age 85.
-Regarding longevity annuities, why are payments large than those received from a regular annuity? - -
Because of the delay in receipt of the actual payments.
-Reverse mortgages can be used for what purpose? - -To generate a lump sum that can be used to fund
long term care.
A "rising equity glidepath" typically will lead to a ________ equity exposure over one's total lifetime. - -
Decreased. Remember: RISING = decrease. HIGH = Low.
-Are withdrawals from an IRA to pay for qualified expenses exempt from the 10% early withdrawal
penalty? - -Yes.
-Assume that a worker's Social Security full retirement age is 66. What percentage of the worker's full
retirement age benefits will be paid to her at age 62? - -A worker can begin receiving Social Security
retirement benefits at age 62, but at a 25% reduction from the full amount that would be received at full
retirement age 66. So 100% benefits minus the reduction of 25% = 75%.
Remember 62 = 25% reduction!
-Dan, age 58 has decided to being periodic withdrawals from his IRA. In order to avoid the 10% early
withdrawal penalty, distributions must continue until at least what age? - -Age 63. Distributions must
continue for at least five years or until the individual has reached 59.5, whichever is later.
-Financial statement ratios are part of what kind of analysis? - -Fundamental analysis.
-How do you calculate the inflation-adjusted rate of return? - -1 plus the Rate of Return
Divided by
1 plus the interest rate
minus one
multiplied by 100
-How much can a single person exclude on the sale of their home? - -Up to $250,000.00, provided the
home has been used as the principal residence for two of the previous five years.
A partial exclusion is available if the two year rule is not met due to health, job or other unforeseen
circumstances.
-How you calculate the weighted beta of a portfolio? - -You multiply the weight times the beta for each
stock, then you add those numbers up together.
-If you take a hardship distribution from your TSA, what would be the tax consequences? - -Hardship
withdrawals that are used to pay certain medical expenses would be subject to income tax but not to
the 10% tax penalty.
-In order to be considered a "qualified" policy, a long-term care policy must provide for what? - -
Nonforfeiture options, cognitive impairment must be covered, it must be guaranteed renewable and
conform to the National Association of Insurance Commissioners Model Act.
, -Intestate property passes by means of what? - -The probate process. It is NOT a will substitute. Property
that passes by the laws of intestate succession is not affected y any will provisions. Intestate succession
statues give property to many other family members before transferring it to the state.
-Moving averages, graphs and statistics regarding the supply and demand of stocks are an example of
what kind of analysis? - -Technical analysis.
-Name a few things that Medicare Part A covers. Hint: Remember; Part AH! HAhspital! - -Post-hospital
home health care - 100 home health care visits per benefit period and expenses such as in patient
hospital care, post hospital skilled nursing care, post hospital home health care, psychiatric hospital care
and blood in excess of three pints.
-Name a few things that Medicare Supplemental Insurance (Part B) provides coverage for. - -Provides
coverage for physicians services and the following that are not already covered by Part A: Home health
care, medical services, therapist, ambulances and certain costs for blood that are no covered in Part A
-Net short-term capital gains are treated as what type of income? - -Ordinary. They are subject to the
taxpayers regular marginal tax rate.
-Nick wants to maintain the purchasing power of $75,000 (in today's dollars) in retirement. If inflation
continues to average 3.5%, approximately what amount will Nick need in 20 years to equal the
purchasing power of $75,000 today? (Round your answer.) - -If you know the Rule of 72, and you divide
3.5 into 72, you arrive at the number 20, which is the number of years it will take for a sum to double.
With a calculator, you can solve for the future value of $75,000 over 20 years at 3.5%.
Keystrokes: 20 N, 3.5 I/YR, 75,000 PV, FV = $149,234; rounded = $150,000
-Over a period of 10 years, Mike contributed a total of $20,000 to a non deductible IRA. The current
value of his IRA is $32,000 and Mike, who is 50 years old, has decided to use his IRA assets to purchase a
second home. Assuming his tax bracket is 35%, how much will he owe in taxes and penalties? - -What do
you do first?
You have to remember that penalties in a non deductible IRA apply ONLY to the earnings. So $32000 -
$20000 = $12000.
Mike is only 50, so that's a 10% penalty.
Add that to his tax bracket so 35% + 10% = 45%.
$12000 x 45% = $5400 in taxes.
-Regarding longevity annuities, at what age must the owner being receiving income? - -Age 85.
-Regarding longevity annuities, why are payments large than those received from a regular annuity? - -
Because of the delay in receipt of the actual payments.
-Reverse mortgages can be used for what purpose? - -To generate a lump sum that can be used to fund
long term care.
