Posts by Dan Madden, CFP®
CFP 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 ANSWERExpandB is the answer.…
Read MoreDouble Taxation on Medicare and Social Security?
Course: Income Tax PlanningLesson 7: Arriving at Adjusted Gross Income Student Question: Am I correct that this looks like paying taxes over taxes by first adding the 2.9% for Medicare taxes, and then paying Social Security tax over that? “3. Calculate self-employment tax: Instructor Response: Hi This is a really common point of confusion, so…
Read MoreEarnings Test Calculation
In 2026, Maria, age 63, begins receiving Social Security retirement benefits. She earns $50,000 from employment during the year. The 2026 earnings limit for individuals under full retirement age is $24,480. Approximately how much of Maria’s Social Security benefits will be withheld due to the earnings test? $0 $12,760 $12,240 $25,520 CLICK TO REVEAL ANSWERExpandB is…
Read MoreIrrevocable Non-Grantor Trust Clarification
Course: Estate PlanningLesson 9: Income Taxation of Trusts and Estates Student Question: I wanted to make sure I understand this correctly. Irrevocable non grantor tax is on the trust. If it distributes the income, then the tax is on the beneficiaries. The only case in which an Irrevocable non grantor trust doesn’t distribute the entire income is…
Read MoreForeign Tax Credit
A U.S. taxpayer earns income from both U.S. and foreign sources and pays income tax to a foreign government. Which of the following limits the amount of foreign tax credit that may be claimed? The taxpayer’s adjusted gross income The taxpayer’s marginal tax bracket The amount of U.S. tax attributable to foreign-source income The taxpayer’s…
Read MoreMaximum Family Benefit
Course: Insurance PlanningLesson 10: Social Security Student Question: Does the maximum family benefit apply to a husband and wife that are both fully insured if the combined total between the two exceeds the maximum family limit? If I understand correctly, the maximum family limit only applies if there are beneficiaries within the family receiving benefits…
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