Dan Madden, CFP® – Page 44 – Online CFP Program

Selecting an Appropriate Trust

Which of the following trusts should Jason establish in his Will to provide for his son Gaven’s living expenses until Gaven reaches age 65 if Gaven is currently a 30-year old unemployed aspiring actor? 2503(b) Trust 2503(c) Trust Crummey Trust Totten Trust CLICK TO REVEAL ANSWER Expand A is the answer. The 2503(b) Trust would…

Deducting Advisory Fees

Course: Income Tax PlanningLesson 10: Recognition of Expenses, Losses, and Deductions Student Question: Hi- I read that advisory fees are no longer deductible. So, in this question (below), is it deductible because this is treated as a business deduction since Roger is Self-Employed? Alisha Sheridan, A CFP licensee and fee-only financial planner, has assisted Roger Regate, a self-employed physician, in tax and investment…

Section 303 Redemption

A Section 303 redemption is most likely appropriate for which of the following estates? At Fred’s death, Fred owned all of his assets including the stock of a closely held corporation in Joint Tenancy WROS with his wife. Before Gloria’s death, she transferred all of her assets including the stock in a closely held corporation…

Life Insurance in the Gross Estate

Which of the following assets would be included in Martin’s gross estate? Life insurance on Martin’s life purchased one year before he died by the trustee of Martin’s irrevocable life insurance trust. Life insurance on Martin’s life purchased by Martin’s wife two years before he died. Life insurance on Martin’s life purchased three years before…

Question: ADP Rules and 401(k)

Which of the following statements concerning differences between qualified and nonqualified stock options is correct? The employer can deduct the cost of both when they are granted. The employer can deduct the cost of qualified stock options but not nonqualified stock options. The employer can deduct the cost of qualified stock options, but the cost…

Board Releases Final Procedural Rules

CFP® Board Updates On May 29, 2020, the CFP Board announced the adoption of new Procedural Rules for the enforcement of the ethical and practical standards for CFP® Professionals. These new procedural rules become effective on June 30, 2020, when the CFP Board begins enforcement of the new Code of Ethics and Standards of Conduct…

ADP Rules and 401(k)

KC Corporation offers a 401(k) Plan. Under the ADP rules, what is the maximum salary percentage the highly compensated employees can contribute if the non-highly compensated employees contribute 6% of their salary? 6% 8% 10% 12% CLICK TO REVEAL ANSWER Expand B is the answer. Since the non-highly compensated employees contributed between 2% and 8%,…

Annual Return and Compounding

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: My question relates to being able to clearly distinguish when the CFP Board Exam will require an annual or other period for the answer. Question 5(b) asks: “What is the rate of return on Investment 2 using daily compounding?” What is the annual rate of return on Investment 2, made 3 years…

ESOPs and Stock Bonus Plans

Which of the following statements concerning the characteristics of ESOPs and stock bonus plans is correct? The employer is required to make a specific annual contribution. Non-vested account balances of terminated participants are usually reallocated to the remaining participants. The employer assumes the risk associated with the investment of trust fund assets. The increased investment…

Defined Benefit Plan Reversion Tax

Lucky Star Corp has been extremely lucky with their defined benefit plan as it is currently overfunded. Management decided to terminate the plan while they are overfunded and share the excess with the employees. What amount of reversion tax will Lucky Star Corp have to pay upon termination? 0% 10% 20% 50% CLICK TO REVEAL…