CFP® Practice Question

In 2026, a married couple makes a gift of $60,000 to their adult child. They elect to split the gift. How much of the gift will be considered a taxable gift?   $0 $22,000 $41,000 $60,000 CLICK TO REVEAL ANSWER Expand B is the answer.   In 2026, the annual gift tax exclusion is $19,000…

Which of the following bonds would be MOST sensitive to changes in interest rates? A 2-year Treasury bond A 5-year corporate bond A 10-year municipal bond A 30-year Treasury bond CLICK TO REVEAL ANSWER Expand D is the answer.   Interest rate risk increases with longer maturities. A 30-year bond has the greatest duration and…

A client withdraws $30,000 from her Roth IRA in 2026. The account consists of $20,000 in contributions and $10,000 in earnings. She is age 45 and does not meet any exception to the early withdrawal penalty. How will the $30,000 distribution be treated for tax purposes? Entire amount is tax-free and penalty-free Contributions are tax-free;…

A CFP® professional is evaluating a client’s life insurance needs using the capital needs analysis approach.  Which of the following would be classified as a capital need rather than an income need?  Monthly living expenses for surviving family members Future college education costs for children Mortgage payoff at death Replacement of the client’s salary CLICK…

A client turns age 73 in 2026 and must begin taking required minimum distributions (RMDs) from her traditional IRA.  Which of the following statements is CORRECT regarding her first RMD?  It must be taken by December 31, 2026 It may be delayed until April 1, 2027 It is not required until age 75 It can…

An employee pays premiums for an individual disability income insurance policy with after-tax dollars. The employer does not contribute to the policy.  If the employee becomes disabled and begins receiving benefits, how will the benefits be taxed?  Fully taxable as ordinary income Partially taxable based on employer contributions Tax-free Subject to capital gains tax rates…

In 2026, a married couple filing jointly has taxable income of $90,000, which includes $10,000 of long-term capital gains.  What federal tax rate applies to the $10,000 of long-term capital gains?  0% 15% 20% Ordinary income tax rates CLICK TO REVEAL ANSWER Expand A is the answer For 2026, the 0% long-term capital gains threshold…

In 2026, a client has a 529 plan for her daughter that has been open for 20 years. The beneficiary has graduated college and does not need the remaining funds. The account balance is $60,000, all attributable to contributions and earnings made more than five years ago. The client is considering rolling funds from the…

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…

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…