CFP® Practice Question: What Would You Do if Laid Off?

The correct answer is A. All of the choices offered in answer to this question are correct. Candidates need to select the best answer. In this question, the CFP Board is looking for the choice of answer that will indicate the candidate knows the timing for these different benefits. The question asks which action Bob should do first, because one of the benefits will start before the others have to be arranged. The unemployment benefits will typically start after a one-week waiting period, so Bob should arrange for these benefits as soon as he is laid off. The rollover of a qualified retirement plan does not need to occur immediately because Bob is not retiring, and there is no loss of benefits during the delay. Bob will be able to use distributions from an IRA for health insurance premiums after he has received unemployment compensation for 12 weeks. Thus, applying for unemployment compensation needs to come first. Conversion of disability coverage under COBRA can occur during a 60-day period following Bob’s termination. Notification to the bank holding Bob’s mortgage does not remove Bob’s obligation to pay the mortgage. The bank may work with Bob to extend the time for payments, but the unemployment compensation benefits are certainly more immediate.