Dan Madden, CFP® – Page 2 – Online CFP Program

Backdoor Roth IRA Taxation

In 2026, Maria, age 52, is single and has MAGI of $210,000, making her ineligible to contribute directly to a Roth IRA. She makes a $7,500 nondeductible contribution to a traditional IRA and immediately converts the entire balance to a Roth IRA. At the time of conversion, Maria also owns a rollover traditional IRA from a former…

Replacement Cost Reimbursement

Course: Insurance PlanningLesson 6: Commercial Property and Liability Insurance Student Question: Hi, The way I understand the example below is that since the cost, current value and depreciation are not relevant, it seemed to me that the building is only insured for 77.77% of its replacement value ($14,000,000/$18,000,000). This would lead to the payout from…

Dying Intestate

If a client dies intestate, which of the following statements is correct? All assets automatically pass by beneficiary designation The state determines how probate assets are distributed The executor can distribute assets according to verbal wishes Property held jointly with rights of survivorship becomes subject to probate CLICK TO REVEAL ANSWER Expand B is the…

Skewness versus Kurtosis

Course: Investment PlanningLesson 13: Asset Allocation Student Question: Hello, Can you help me understand the difference between Kurtosis and Skewness? I can’t quite piece it together. Thanks! Instructor Response: Great question, You’re right that as total capital in a pooled investment grows, the overall dollar amount of earnings can Entire books have been written on this…

HO-3 Coverage

Under an HO-3 homeowners’ policy, which of the following losses is NOT covered unless an endorsement is purchased? Fire damage to the dwelling Theft of personal property Damage caused by a burst pipe Flood damage from rising groundwater CLICK TO REVEAL ANSWER Expand D is the answer. An HO-3 policy covers the dwelling for open perils and…

Solving for Annual Equivalent Rate

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Hello, I am confused as to how to get the correct answer for number 4. Jackie invests her bonus at the beginning of this calendar year. If she earns 7% compounded monthly, what is the annual equivalent rate? Round your answer to two decimal places.…

Tax on Stock Gains

Linda sells stock she has held for 14 months at a $12,000 gain. She is in the 24% marginal income tax bracket. How is the gain taxed? As ordinary income at 24% As a long-term capital gain at 15% As a long-term capital gain at 20% As a qualified dividend taxed at 15% CLICK TO…

Dilution of Earnings in Pooled Investments

Course: Investment PlanningLesson 8: Pooled Investments Student Question: Hello, One of the disadvantages of pooled investments is Dilution of earnings. Can you explain how? I would think that as the capital grows, the earnings will grow as well? Thanks! Instructor Response: Great question, You’re right that as total capital in a pooled investment grows, the…

Bond Price Movement

Which of the following bonds would be expected to experience the greatest price decline if interest rates rise by 1%? A 3-year corporate bond with a 5% coupon A 10-year Treasury bond with a 7% coupon A 10-year Treasury bond with a 3% coupon A 5-year municipal bond with a 6% coupon CLICK TO REVEAL ANSWER…

Qualified Plan Distributions After Death

Course: Retirement PlanningLesson 7: Income Distribution Planning for Qualified Plans Student Question: Hi- The lesson says: Annual distributions are required in years 1 – 9 if the participant died after his or her required beginning date. Any undistributed amount must then be distributed no later than December 31 of the tenth year following the year of…