Dan Madden, CFP® – Page 6 – Online CFP Program

Roth IRA Contribution Eligibility

In 2026, which of the following taxpayers may make a full Roth IRA contribution, assuming all other eligibility requirements are met? Single filer with MAGI of $270,000 Married filing jointly with MAGI of $255,000 Head of household with MAGI of $130,000 Married filing separately with MAGI of $15,000 CLICK TO REVEAL ANSWERExpandC is the answer.…

Interest Rate Risk in a Bond

Course: Investment PlanningLesson 10: Fixed Income Securities Analysis Student Question: I’m not clear why holders of long-term bonds are subject to interest rate risk. If a 20-year bond is purchased at par with a coupon rate of 6.25% ($62.50/year), it seems to me that the investor would still receive $62.50 a year regardless of interest rate changes. What…

Taxable Income

A CFP® professional is reviewing a client’s Form 1040. Which of the following best describes how taxable income is calculated? Total income reduced by tax credits Adjusted gross income reduced by deductions Gross income reduced by exclusions Total income reduced by adjustments and credits CLICK TO REVEAL ANSWERExpandB is the answer. Taxable income = AGI −…

Appropriate Emergency Fund

Course: Fundamentals of Financial PlanningLesson 3: Personal Financial Statements Student Question: Hi, Why is the answer to review question down below 22,500 (only 3 months of income needed)? I would have thought it would be 45,000 (six months of income needed). I thought six months would be needed since they (1) both did not have…

Tax Credits available by Adjusted Gross Income

Which of the following tax credits, if any, is available to a taxpayer regardless of adjusted gross income (AGI)? Earned Income Tax Credit Credit for the Elderly or Disabled Adoption Expense Credit Foreign Tax Credit CLICK TO REVEAL ANSWERExpandD is the answer. There is no AGI phase-out for the Foreign Tax Credit. It is limited…

American Depository Receipts

Course: Investment PlanningLesson 4: International Equity Securities Student Question: Hi, On the CFP board practice question (below), the correct answer was “4 only.” How come ADRs don’t eliminate currency risk? Aren’t they purchased and sold with US dollars? American depository receipts (ADRs) are used to Instructor Response: Hi Great question. I can see exactly why you…

Required Minimum Distributions

In 2026, James turns age 73. He owns the following retirement accounts: Traditional IRA: $480,000 Former employer’s 401(k): $320,000 Roth IRA: $150,000 James is retired and does not work for the employer sponsoring the 401(k). What is James’s minimum required distribution obligation for 2026? RMDs must be taken from the traditional IRA and the 401(k), but…

Accounting for Inflation

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Hi, Good afternoon. Can you explain why we didn’t take inflation into consideration for the second calculation in the first problem? Kind regards, Austin Dawn wants to have $25,000 in today’s dollars for a round-the-world cruise when she retires 11 years from now. She…

The Business Cycle

Which phase of the business cycle is typically characterized by declining corporate profits, rising unemployment, tightening credit conditions, and falling consumer confidence? Expansion Peak Contraction Trough CLICK TO REVEAL ANSWERExpandC is the answer.

529 Plan Contribution Limits

Course: Fundamentals of Financial PlanningLesson 6: Educational Savings Techniques Student Question: Hi, Do the limits on 529 plan contributions apply to that specific account, the child, or the contributor? Is it possible for a contributor to have more than one 529 plan, if they’ve reached the limit on one? Instructor Response: Hi Good question. It’s…