Posts by Dan Madden, CFP®
Internal Rate of Return Calculation
Course: Fundamentals of Financial Planning Lesson 5b: Using the HP 10bII Calculator Student Question: In Example 2, the solution given has 6 years (including CF0) instead of 5. I believe the first year of Carl’s coin purchase should be CF0, but the fifth year – which includes a purchase and a sale – should be CF4.…
Read MoreEarnings Test Calculation
In 2026, a married couple filing jointly has taxable income of $90,000, which includes $10,000 of long-term capital gains. What federal tax rate applies to the $10,000 of long-term capital gains? 0% 15% 20% Ordinary income tax rates CLICK TO REVEAL ANSWER Expand A is the answer For 2026, the 0% long-term capital gains threshold…
Read MoreLate Medicare Enrollment Penalty
Course: Insurance PlanningLesson 10: Fundamentals of Social Security and Medicare Student Question: Hi, Under the ‘late enrollment penalty’ link, there is a example given by Medicare. It states that there is a 20% penalty because 30 months had lapsed, or at least 2 12-month periods post initial enrollment had lapsed. The date given for initial…
Read MoreCFP Board Code of Ethics
In 2026, a client has a 529 plan for her daughter that has been open for 20 years. The beneficiary has graduated college and does not need the remaining funds. The account balance is $60,000, all attributable to contributions and earnings made more than five years ago. The client is considering rolling funds from the…
Read MoreLoan Impact on Basis in a Modified Endowment Contract
Course: Insurance PlanningLesson 15: Income Taxation of Life Insurance Student Question: Hello, Can you help me better understand the difference between policy basis in a normal policy and policy basis on a modified endowment contract. From the Coursework: But for MEC purposes, the basis is increased by any portion of loans that were considered taxable…
Read MoreCFP Board Code of Ethics
A CFP® professional is recommending a rollover from a client’s 401(k) plan into an IRA that will generate higher ongoing advisory fees. The 401(k) plan offers low-cost institutional share classes not available in the IRA. Under CFP Board’s Code of Ethics and Standards of Conduct, which of the following actions is required? Recommend the rollover…
Read MorePhantom Stock
Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: Hello, What is the difference between Stock options and Restricted stock plan or phantom stock? Seems confusing. Instructor Response: Hi, Onward and Upward,
Read MoreNet Unrealized Appreciation (NUA)
A client retires in 2026 and takes a lump-sum distribution of employer stock from her qualified plan. The stock has a cost basis of $200,000 and a fair market value of $750,000 at distribution. If she elects Net Unrealized Appreciation (NUA) treatment, how will the $550,000 of appreciation be taxed? As ordinary income in the…
Read MoreUnused Premium
Course: Insurance PlanningLesson 8: Gift and Estate Valuation Student Question: Could you please clarify for me what the unused premium would be in term life insurance? I don’t quite understand how you could not use the premium. Thanks. Instructor Response: Hi Certainly. A lot of different terms in insurance, to be sure. Assume you pay…
Read MoreEstate Tax and Applicable Credit
In 2026, Thomas dies with a taxable estate of $18,000,000. He made no prior taxable gifts. The Basic Exclusion Amount (BEA) in 2026 is $15,000,000 and the applicable credit amount is $5,945,800. What portion of Thomas’s estate will be subject to federal estate tax? $0 $3,000,000 $12,054,200 $18,000,000 CLICK TO REVEAL ANSWER Expand B is…
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