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Taxpayer-Friendly Changes to Retirement Plan Penalties
Good to Know Distributions from Traditional IRAs and employer-sponsored retirement plans such as 401(k) plans are generally subject to a penalty for taking the money out too early (premature distribution) or too late (delayed distribution penalty). Secure Act 2.0 gives welcome penalty relief effective for tax years beginning on or after January 1, 2023. Terminal…
Current Ratio and Primary Residence
Course: Fundamentals of Financial PlanningLesson 3: Personal Financial Statements Student Question: What role does the client’s primary residence play in the current ratio calculation? Is their outstanding mortgage loan amount considered a liability? Instructor Response: That’s a great question. The residence is not considered a liquid asset and is excluded from “assets” for the current ratio. Only debt…
Debt Discharged in Chapter 7 Bankruptcy
Chuck lost his job last year when his company moved their factory overseas. Chuck has been unable to find another job and had to file for a Chapter 7 bankruptcy. Which of the following debts can be discharged in the bankruptcy? $10,000 of rent he owes his landlord $20,000 of taxes he owes the IRS…
Your Smart Watch Can Void Your Passing Score on the CFP® Board Exam
CFP® Certificants in the News CFP Board’s recently revised PATHWAY TO CFP® CERTIFICATION AGREEMENT (PATHWAY) highlights key requirements for certification. We’ll address select topics contained within this CFP Board publication, beginning with when you can publicly represent yourself as a “Candidate for CFP® Certification. Candidate for CFP® Certification You can represent yourself in this manner…
Using Future Value Versus Present Value in Multi-Step Questions
Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: I am attempting to understand when to use PV or FV in the second step of the multi-step problems…the payment calculations. I understand that we will need to first calculate the required capital for the financial goal (Ex: retirement or college) and that would…
Defining a Stock Spread
Which of the following combinations correctly describes a spread? A combination of a short sale and a purchase of a call for the same stock A combination of buying and selling calls on the same stock with different expiration dates and exercise prices A combination of a put and a call on the same stock…
3 Ways to Help Protect Against Income Tax Fraud
Good to Know You just received a letter from the IRS that doesn’t make sense. It may not be cause for alarm, but consider this-the letter may be a red flag for the potential theft of your confidential income tax information. Cybercriminals can use this information to wreck your finances, for example by: Taking out…
Understanding the Relationship Between Coupon Rates and Duration
Course: Investment PlanningLesson 9: Fixed Income Securities Student Question: There is a question regarding duration that I continue to struggle with.Which of the following are true: Can you explain #1 and #3? Instructor Response: Thank you for your question. This can become a bit convoluted. Let’s unpack the word “duration” first. Duration is nothing more than…
Appropriate Valuation Method
Sam McBuck has an estate of $10 million and would like to leave it to his nephews. Sam assumes he will live for at least 5 more years. The property in Sam’s estate currently includes the following assets: An apartment building in downtown New York that Sam owns with three partners, each of whom wants…