CRPC EXAM| STUDENT-FRIENDLY
QUESTIONS AND DETAILED ANSWERS
(CORRECT ANSWERS) GRADED A+
|2025/2026
If Tom and Jenny want to save a fixed amount annually to accumulate $2
million by their retirement date in 25 years (rather than an amount that grows
with inflation each year), what level annual end-of-year savings amount will
they need to deposit each year, assuming their savings earn 7% annually? -
Answer Set your calculator to the "End" mode and "1 P/Yr." Inputs: FV =
2000000, I/YR = 7, N = 25, PV = 0, then PMT = $31,621
On December 31 of last year (year 1), Samuel had $360,000 in his IRA. He has
named Tully, his wife, as beneficiary. In year 2, Samuel turned 73 on October 17,
and Tully turned 56 on January 8. Assume that it is now year 4 and that Samuel
dies on April 15. Tully wants you to determine her distribution alternatives.
Which one of the statements below correctly describes one of the choices available
to Tully?
A)
Tully must complete distribution by December 31 of the year containing the fifth
anniversary of Samuel's death.
B)
,Tully may roll the entire amount into an IRA in her name and defer RMD until she
reaches age 72.
C)
Because Samuel had selected a joint life expectancy calculation and had begun to
receive minimum distribution payments on a recalculated basis (and since his life
expectancy became zero), Tully must receive distribution of the entire amount.
D)
Tully must continue distributions, but they must be reca - Answer B
Tully is not required to take a lump sum distribution, receive all distributions by
the end of the fifth year following Samuel's death, or even continue distributions-
although these are all options available to her. As a spouse, she would have the
option to roll over the remaining balance to an IRA in her name and defer RMD
until she reaches age 73.
LO 7-4
Your client has asked you what sources exist for long-term care insurance. Which
of the following are generally considered potential sources for the funds to cover at
least some of the cost of long-term care (LTC)?
Medicaid
Medicare
group long-term care insurance offered through employers - Answer ALL OF
THESE
These three are possible sources of LTC except health insurance. Medicaid and
long-term care insurance provide recipients with benefits such as nursing home
,care. Medicare provides only 20 days of skilled nursing care at full cost and 80
days thereafter with a substantial copay, in only a limited number of situations. It is
designed only to provide temporary care while patients improve enough to go
home, but it does provide some level of LTC coverage.
LO 5-7
Jennifer recently separated from service with Acme Inc. at age 52, and rolled her
qualified plan lump sum into a new IRA. She had been a plan participant for 12
years. This year, she began working for a new employer that provides a profit
sharing plan for employees. Jennifer will be eligible to participate in her new
employer's profit sharing plan in June of next year. Which one of the following
statements describes an option that will be to Jennifer's benefit?
A)
Jennifer should leave the rollover funds in the rollover IRA until she is age 65, then
she can distribute the IRA and benefit from lump sum forward averaging treatment.
B)
Jennifer should leave the rollover funds in the IRA for three more years. At age 55,
she can distribute the account and escape the 10% early withdrawal penalty.
C)
Jennifer should use the direct rollover to roll the entire IRA over into her new
employer's qualified profit sharing plan i - Answer C
If the qualified plan allows for loans, rolling the IRA into the qualified plan would
give her a resource to meet a financial need without incurring income tax or a tax
penalty. Forward-averaging treatment is not available on any distribution from an
IRA, but that point is moot because Jennifer was not born before January 1, 1936.
Jennifer would not qualify for capital gains treatment since all distributions from
, IRAs and qualified plans are taxed as ordinary income. Taking a current
distribution from the IRA would result in a current tax liability.
LO 7-2
Which one of the following is a potential problem with a golden parachute?
A)
An employer may have to pay a nondeductible excise tax on a portion of the
payment.
B)
Any excess payment would be nondeductible by the payor and subject to an excise
tax by the employee.
C)
It must meet the nondiscrimination requirements of ERISA with regard to highly
compensated employees.
D)
These payments are subject to the restrictions imposed under Rule 144. - Answer B
If compensation falls into the golden parachute category, the employer will lose the
deduction on any excess parachute payments and the employee will be charged a
nondeductible 20% excise tax on any excess parachute payments.
LO 6-3
Which one of the following types of distributions are eligible for rollover
treatment?
QUESTIONS AND DETAILED ANSWERS
(CORRECT ANSWERS) GRADED A+
|2025/2026
If Tom and Jenny want to save a fixed amount annually to accumulate $2
million by their retirement date in 25 years (rather than an amount that grows
with inflation each year), what level annual end-of-year savings amount will
they need to deposit each year, assuming their savings earn 7% annually? -
Answer Set your calculator to the "End" mode and "1 P/Yr." Inputs: FV =
2000000, I/YR = 7, N = 25, PV = 0, then PMT = $31,621
On December 31 of last year (year 1), Samuel had $360,000 in his IRA. He has
named Tully, his wife, as beneficiary. In year 2, Samuel turned 73 on October 17,
and Tully turned 56 on January 8. Assume that it is now year 4 and that Samuel
dies on April 15. Tully wants you to determine her distribution alternatives.
Which one of the statements below correctly describes one of the choices available
to Tully?
A)
Tully must complete distribution by December 31 of the year containing the fifth
anniversary of Samuel's death.
B)
,Tully may roll the entire amount into an IRA in her name and defer RMD until she
reaches age 72.
C)
Because Samuel had selected a joint life expectancy calculation and had begun to
receive minimum distribution payments on a recalculated basis (and since his life
expectancy became zero), Tully must receive distribution of the entire amount.
D)
Tully must continue distributions, but they must be reca - Answer B
Tully is not required to take a lump sum distribution, receive all distributions by
the end of the fifth year following Samuel's death, or even continue distributions-
although these are all options available to her. As a spouse, she would have the
option to roll over the remaining balance to an IRA in her name and defer RMD
until she reaches age 73.
LO 7-4
Your client has asked you what sources exist for long-term care insurance. Which
of the following are generally considered potential sources for the funds to cover at
least some of the cost of long-term care (LTC)?
Medicaid
Medicare
group long-term care insurance offered through employers - Answer ALL OF
THESE
These three are possible sources of LTC except health insurance. Medicaid and
long-term care insurance provide recipients with benefits such as nursing home
,care. Medicare provides only 20 days of skilled nursing care at full cost and 80
days thereafter with a substantial copay, in only a limited number of situations. It is
designed only to provide temporary care while patients improve enough to go
home, but it does provide some level of LTC coverage.
LO 5-7
Jennifer recently separated from service with Acme Inc. at age 52, and rolled her
qualified plan lump sum into a new IRA. She had been a plan participant for 12
years. This year, she began working for a new employer that provides a profit
sharing plan for employees. Jennifer will be eligible to participate in her new
employer's profit sharing plan in June of next year. Which one of the following
statements describes an option that will be to Jennifer's benefit?
A)
Jennifer should leave the rollover funds in the rollover IRA until she is age 65, then
she can distribute the IRA and benefit from lump sum forward averaging treatment.
B)
Jennifer should leave the rollover funds in the IRA for three more years. At age 55,
she can distribute the account and escape the 10% early withdrawal penalty.
C)
Jennifer should use the direct rollover to roll the entire IRA over into her new
employer's qualified profit sharing plan i - Answer C
If the qualified plan allows for loans, rolling the IRA into the qualified plan would
give her a resource to meet a financial need without incurring income tax or a tax
penalty. Forward-averaging treatment is not available on any distribution from an
IRA, but that point is moot because Jennifer was not born before January 1, 1936.
Jennifer would not qualify for capital gains treatment since all distributions from
, IRAs and qualified plans are taxed as ordinary income. Taking a current
distribution from the IRA would result in a current tax liability.
LO 7-2
Which one of the following is a potential problem with a golden parachute?
A)
An employer may have to pay a nondeductible excise tax on a portion of the
payment.
B)
Any excess payment would be nondeductible by the payor and subject to an excise
tax by the employee.
C)
It must meet the nondiscrimination requirements of ERISA with regard to highly
compensated employees.
D)
These payments are subject to the restrictions imposed under Rule 144. - Answer B
If compensation falls into the golden parachute category, the employer will lose the
deduction on any excess parachute payments and the employee will be charged a
nondeductible 20% excise tax on any excess parachute payments.
LO 6-3
Which one of the following types of distributions are eligible for rollover
treatment?
