Florida Financial Planner Certification
Practice Exam Questions And Correct
Answers (Verified Answers) Plus Rationales
2025|2026 Q&A | Instant Download Pdf
1. What is the primary fiduciary duty of a financial planner to their client?
Act in the client’s best interest.
Rationale: Fiduciary duty legally obligates the planner to prioritize the
client’s welfare above their own profit or convenience.
2. What is the maximum contribution limit for a Traditional IRA for
individuals under age 50 in 2025?
$7,000
Rationale: The IRS sets annual contribution limits, with an additional
$1,000 catch-up allowed for those 50 and older.
3. What does the SECURE Act of 2019 require regarding distributions from
inherited IRAs (non-spouse beneficiaries)?
Distributions must be taken within 10 years.
,Rationale: The Act eliminated lifetime “stretch IRAs” for most non-spouse
beneficiaries, imposing a 10-year withdrawal period.
4. What type of insurance protects a financial planner against client
lawsuits for professional negligence?
Errors and Omissions Insurance
Rationale: E&O insurance covers liability from mistakes, omissions, or
inadequate financial advice.
5. What is the main advantage of municipal bonds for high-income
investors?
Interest is exempt from federal income tax.
Rationale: Municipal bond interest is federally tax-free and may also be
state tax-free if issued in the investor’s state of residence.
6. In estate planning, what is the federal estate tax exemption amount in
2025?
$13.61 million per individual
Rationale: The exemption is indexed for inflation; amounts above this are
subject to estate tax.
7. What is the key difference between a revocable and irrevocable trust?
A revocable trust can be changed or revoked by the grantor; an irrevocable
trust cannot.
Rationale: Revocable trusts remain part of the estate, while irrevocable
trusts remove assets from the taxable estate.
,8. What is the maximum contribution limit for a Health Savings Account
(HSA) for a family in 2025?
$8,300
Rationale: The IRS adjusts HSA contribution limits annually, with higher
limits for family coverage.
9. What is the penalty for withdrawing from a Traditional IRA before age
59½, excluding exceptions?
10% penalty plus ordinary income tax.
Rationale: Early withdrawals trigger both penalty and taxation unless
qualifying exceptions apply (first home, education, disability, etc.).
10. Which retirement plan type allows employees to contribute pre-tax
dollars, with employers optionally matching?
401(k) Plan
Rationale: 401(k) plans are employer-sponsored retirement accounts that
reduce current taxable income.
11. What type of life insurance provides coverage for a specific period of
time and has no cash value?
Term Life Insurance
Rationale: Term policies are temporary and pure protection, unlike whole
life which has an investment component.
12. What is dollar-cost averaging in investing?
Investing a fixed amount at regular intervals regardless of price.
, Rationale: This strategy reduces timing risk by spreading purchases over
time, smoothing volatility.
13. In Florida, what is the homestead exemption for property tax purposes
on a primary residence?
Up to $50,000 reduction in assessed value.
Rationale: Florida residents receive exemptions that reduce taxable
property value, lowering property taxes.
14. What is the required minimum distribution (RMD) age for retirement
accounts under SECURE 2.0 (2023 law)?
73
Rationale: SECURE 2.0 raised the RMD age from 72 to 73 starting in 2023.
15. What is the annual gift tax exclusion per recipient in 2025?
$18,000
Rationale: Individuals can gift this amount annually to each recipient
without incurring gift tax or using lifetime exemption.
16. What type of annuity guarantees a fixed payment for life, regardless of
market performance?
Fixed Annuity
Rationale: Fixed annuities pay guaranteed amounts, unlike variable
annuities which depend on investment performance.
17. Which type of retirement plan is designed for self-employed
individuals with no employees?
Practice Exam Questions And Correct
Answers (Verified Answers) Plus Rationales
2025|2026 Q&A | Instant Download Pdf
1. What is the primary fiduciary duty of a financial planner to their client?
Act in the client’s best interest.
Rationale: Fiduciary duty legally obligates the planner to prioritize the
client’s welfare above their own profit or convenience.
2. What is the maximum contribution limit for a Traditional IRA for
individuals under age 50 in 2025?
$7,000
Rationale: The IRS sets annual contribution limits, with an additional
$1,000 catch-up allowed for those 50 and older.
3. What does the SECURE Act of 2019 require regarding distributions from
inherited IRAs (non-spouse beneficiaries)?
Distributions must be taken within 10 years.
,Rationale: The Act eliminated lifetime “stretch IRAs” for most non-spouse
beneficiaries, imposing a 10-year withdrawal period.
4. What type of insurance protects a financial planner against client
lawsuits for professional negligence?
Errors and Omissions Insurance
Rationale: E&O insurance covers liability from mistakes, omissions, or
inadequate financial advice.
5. What is the main advantage of municipal bonds for high-income
investors?
Interest is exempt from federal income tax.
Rationale: Municipal bond interest is federally tax-free and may also be
state tax-free if issued in the investor’s state of residence.
6. In estate planning, what is the federal estate tax exemption amount in
2025?
$13.61 million per individual
Rationale: The exemption is indexed for inflation; amounts above this are
subject to estate tax.
7. What is the key difference between a revocable and irrevocable trust?
A revocable trust can be changed or revoked by the grantor; an irrevocable
trust cannot.
Rationale: Revocable trusts remain part of the estate, while irrevocable
trusts remove assets from the taxable estate.
,8. What is the maximum contribution limit for a Health Savings Account
(HSA) for a family in 2025?
$8,300
Rationale: The IRS adjusts HSA contribution limits annually, with higher
limits for family coverage.
9. What is the penalty for withdrawing from a Traditional IRA before age
59½, excluding exceptions?
10% penalty plus ordinary income tax.
Rationale: Early withdrawals trigger both penalty and taxation unless
qualifying exceptions apply (first home, education, disability, etc.).
10. Which retirement plan type allows employees to contribute pre-tax
dollars, with employers optionally matching?
401(k) Plan
Rationale: 401(k) plans are employer-sponsored retirement accounts that
reduce current taxable income.
11. What type of life insurance provides coverage for a specific period of
time and has no cash value?
Term Life Insurance
Rationale: Term policies are temporary and pure protection, unlike whole
life which has an investment component.
12. What is dollar-cost averaging in investing?
Investing a fixed amount at regular intervals regardless of price.
, Rationale: This strategy reduces timing risk by spreading purchases over
time, smoothing volatility.
13. In Florida, what is the homestead exemption for property tax purposes
on a primary residence?
Up to $50,000 reduction in assessed value.
Rationale: Florida residents receive exemptions that reduce taxable
property value, lowering property taxes.
14. What is the required minimum distribution (RMD) age for retirement
accounts under SECURE 2.0 (2023 law)?
73
Rationale: SECURE 2.0 raised the RMD age from 72 to 73 starting in 2023.
15. What is the annual gift tax exclusion per recipient in 2025?
$18,000
Rationale: Individuals can gift this amount annually to each recipient
without incurring gift tax or using lifetime exemption.
16. What type of annuity guarantees a fixed payment for life, regardless of
market performance?
Fixed Annuity
Rationale: Fixed annuities pay guaranteed amounts, unlike variable
annuities which depend on investment performance.
17. Which type of retirement plan is designed for self-employed
individuals with no employees?
