CFP EXAM PREP UPDATED ACTUAL
Questions and CORRECT Answers
Advantages of Commuting Your Pension to a LIRA - CORRECT ANSWER - Self
management of the investment and funds
- Can list a beneficiary and ease of estate process
- Removes reliance on plan sponsor
Disadvantages of Commuting Your Pension to a LIRA - CORRECT ANSWER - Personal
risk of investments
- Potential loss of bridging benefits
- Some pensions are indexed and can lose that benefit
Commodity Prices rising is what type of indicator - CORRECT ANSWER Leading
Indicator
Advantages of IPP vs DCPP - CORRECT ANSWER - IPP have higher contribution limits
- IPP offer guaranteed income
- IPP can be indexed and DCPP's cannot
- Employer or sponsor needs to cover shortfall and take on investment risk.
Disadvantages of establishing an Inter vivos Trust - CORRECT ANSWER - Costly to
establish and maintain
- Lose control of assets in the trust
- beneficiaries have restricted access to the asset
- subject to the 21-year rule
Advantages of inter vivos trusts - CORRECT ANSWER - Avoids probate - assets pass
directly to beneficiaries
, - passes future growth/income to beneficiaries
- protects assets from creditors
Deductible Expenses for Employees - CORRECT ANSWER - Vehicle expenses if used for
work
- Home office expenses - if working from home is required.
- Professional Dues
Deductible Expenses for Self-Employed (Sole Proprietor) - CORRECT ANSWER - Home
Office
- Home expenses related to the office
- Travel costs related to work
- Accounting/legal fees
- professional dues
- 50% of meals
- Internet & Phone related to work
RESP withdrawal rules (if not used be kids) - CORRECT ANSWER - AIP withdrawals are
taxed as income plus a 20% penalty
- Can contribute up to $50,000 of AIP into an RRSP
- Can transfer to another RESP or RDSP
Questions to ask for insurability/coverage needs? - CORRECT ANSWER
Questions to ask for estate distribution? - CORRECT ANSWER
Questions to ask prior to establishing an investment plan? - CORRECT ANSWER
Questions and CORRECT Answers
Advantages of Commuting Your Pension to a LIRA - CORRECT ANSWER - Self
management of the investment and funds
- Can list a beneficiary and ease of estate process
- Removes reliance on plan sponsor
Disadvantages of Commuting Your Pension to a LIRA - CORRECT ANSWER - Personal
risk of investments
- Potential loss of bridging benefits
- Some pensions are indexed and can lose that benefit
Commodity Prices rising is what type of indicator - CORRECT ANSWER Leading
Indicator
Advantages of IPP vs DCPP - CORRECT ANSWER - IPP have higher contribution limits
- IPP offer guaranteed income
- IPP can be indexed and DCPP's cannot
- Employer or sponsor needs to cover shortfall and take on investment risk.
Disadvantages of establishing an Inter vivos Trust - CORRECT ANSWER - Costly to
establish and maintain
- Lose control of assets in the trust
- beneficiaries have restricted access to the asset
- subject to the 21-year rule
Advantages of inter vivos trusts - CORRECT ANSWER - Avoids probate - assets pass
directly to beneficiaries
, - passes future growth/income to beneficiaries
- protects assets from creditors
Deductible Expenses for Employees - CORRECT ANSWER - Vehicle expenses if used for
work
- Home office expenses - if working from home is required.
- Professional Dues
Deductible Expenses for Self-Employed (Sole Proprietor) - CORRECT ANSWER - Home
Office
- Home expenses related to the office
- Travel costs related to work
- Accounting/legal fees
- professional dues
- 50% of meals
- Internet & Phone related to work
RESP withdrawal rules (if not used be kids) - CORRECT ANSWER - AIP withdrawals are
taxed as income plus a 20% penalty
- Can contribute up to $50,000 of AIP into an RRSP
- Can transfer to another RESP or RDSP
Questions to ask for insurability/coverage needs? - CORRECT ANSWER
Questions to ask for estate distribution? - CORRECT ANSWER
Questions to ask prior to establishing an investment plan? - CORRECT ANSWER
