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CFP® Practice Question of the Week: Taxable Gifts

By Keir

Kevin, a 55-year-old corporate executive, wants advice as to when he can retire. His current salary is $240,000 and he receives an annual bonus of $300,000; he also has annual stock options and restricted stock awards valued at $100,000. His employer contributes to a cash balance pension plan as and matches his contributions to a…

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Good to Know: Tricks and Traps in the New 3.8% Medicare Tax

By Bruce Starks, CPA, CFP®

A CERTIFIED FINANCIAL PLANNERTM can help clients save thousands of dollars by helping clients manage this new tax.  Medicare tax has historically been assessed only against earned income. Effective January 1, 2013, a new 3.8% Medicare Tax (the 3.8% tax) will also be levied against unearned income of taxpayers with adjusted gross income (AGI) above thresholds. How…

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CFP® Practice Question of the Week: Income Planning

By Keir

A 56-year-old client becomes unemployed due to disability. The client tells a CFP® professional that he hopes to go back to work eventually, but is not sure when that might be. Until then, he needs to generate replacement income. His only available asset is his traditional 401(k) plan. What is the best way for the…

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Student Question of the Week: Financial Planning

By Dan Madden, CFP®

Student Question from: Shannon P.Course:  Fundamentals of Financial Planning – Economic Concepts Student Question: I need a better understanding of the relationship between supply and demand, in particular the equilibrium price. Instructor Response: Hi Shannon! The short of it is that the equilibrium price is the point at which the demand for a good meets…

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CFP® Practice Question of the Week: Financial Planning

By Keir

A client has a $1,200,000 portfolio consisting of the following four stocks:    $300,000 ABC @ 1.1 beta    $225,000 RTR @ 0.7 beta    $405,000 XYZ @ 0.3 beta    $270,000 PDQ @ 1.3 beta What is the beta of the portfolio as a whole?   0.8   0.85   0.91   1.0 CLICK TO REVEAL ANSWER This question appeared on…

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Student Question of the Week: Financial Planning

By Dan Madden, CFP®

Student Question from: David L.Course:  Fundamentals of Financial Planning – Using the Calculator Student Question: Dan – I’m not understanding Question #4. Why is 1 used as the present value? And then why 1 x 12?  From the Lesson:  4. Jackie invests her bonus at the beginning of this calendar year. If she earns 7%…

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CFP® Practice Question of the Week: Social Security

By Keir

Ron and his wife Susan, both 61 years of age, ask a CFP® professional to provide a recommendation on whether or not Susan should start to draw Social Security benefits when she first becomes eligible at age 62. Which of the following would be the least important to obtain in order to provide a recommendation?…

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Student Question of the Week: Retirement Planning

By Dan Madden, CFP®

Student Question from: SteveCourse:  Retirement Planning – SEP Employer Contributions Student Question: Dan, should the second paragraph below say, “…the lesser of 100% of covered compensation…”, and NOT 25%?  Thanks!    While the funding amount can be at the sponsor’s discretion, the actual contribution structure is inflexible and is generally a uniform percentage of compensation. …

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Student Question of the Week: Retirement Planning

By Dan Madden, CFP®

Student Question from: Natalia G.Course:  Retirement Planning – Characteristics of ESOPs Student Question: Quick question – under “Recognition deferral” paragraph (below in bold), it is stated that ESOP plan participants can “defer recognition of a portion of their gains when employer securities are distributed at retirement. Participants are generally eligible to delay recognition of gain…

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