CRPC Qbank 3,4,8 Exam Questions
with Complete Solutions14
Mark, age 54, funded a nonqualified annuity with a $1,000 deposit. His annuity is now worth
$2,500. He would like to make a $500 withdrawal. How will this distribution be taxed?(LO 4-5) -
ANSWERS-It will be fully taxable and subject to an early withdrawal penalty.
A worker's primary insurance amount (PIA) is the amount they receive from Social Security(LO
3-2) - ANSWERS-if he or she began payments at full retirement age.
The PIA is the amount the worker would receive if he or she began payments at full retirement
age.
For a worker whose full retirement age is 66 or later, the annual delayed retirement credit
percentage for the years you delay receipt of benefits beyond (FRA) is(LO 3-2) - ANSWERS-8%.
For those whose full retirement age is 66, they will receive an 8% "raise" for each year they
delay filing after FRA, up until a maximum age of 70. This equals to a total increase of 32%
above their primary insurance amount (PIA).
Delaying receipt of benefits (for example until age 70) will result in all of the following except(LO
3-2) - ANSWERS-permanently reduced benefit amount.
Delaying receipt of benefits will allow you to earn delayed retirement credits, and your future
cost-of-living adjustments will be higher because they will be based on a higher base. Also, the
increased base will ultimately be used to determine survivor benefits.
, The following will result if you delay receipt of benefits until 70 (LO 3-2) - ANSWERS-higher
annual cost-of-living adjustments.
receipt of delayed retirement credits.
larger survivor benefits for the surviving spouse.
Ann, who was born in 1953, has reached her full retirement age (FRA):
age 66 in 2019. She can elect to receive $1,000 now, or delay receipt by two years. She expects
to live until age 90. Ignoring outside factors, when should she begin her benefits?(LO 3-3) -
ANSWERS-two years from now
By delaying two years, her benefit will increase 16%, to $1,160. Forfeiting: $1,000 × 24 months =
$24,000 Gaining: $160/month 24,000 / $160 = 150 months or 12.5 years Ann would need to live
until 78½ to "break even." Because she is expecting to live until age 90, she should opt to delay
receipt of benefits.
Michael, a 62-year-old single man, is considering beginning his Social Security benefits to
supplement his income of $14,000 per year. How much will he lose in Social Security benefits
due to the earned income restrictions?(LO 3-4) - ANSWERS-Nothing because his income is
below $17,640(earnings cap for singles)
If provisional income exceeds the thresholds given, then a maximum of ___________ of Social
Security benefits are subject to taxation.(LO 3-3) - ANSWERS-85%
Brent and Carol have an AGI of $40,000 and they receive a combined Social Security benefit of
$15,000. They have no tax-exempt income. What percentage of their Social Security benefit will
be subject to taxation?(LO 3-3) - ANSWERS-85%
with Complete Solutions14
Mark, age 54, funded a nonqualified annuity with a $1,000 deposit. His annuity is now worth
$2,500. He would like to make a $500 withdrawal. How will this distribution be taxed?(LO 4-5) -
ANSWERS-It will be fully taxable and subject to an early withdrawal penalty.
A worker's primary insurance amount (PIA) is the amount they receive from Social Security(LO
3-2) - ANSWERS-if he or she began payments at full retirement age.
The PIA is the amount the worker would receive if he or she began payments at full retirement
age.
For a worker whose full retirement age is 66 or later, the annual delayed retirement credit
percentage for the years you delay receipt of benefits beyond (FRA) is(LO 3-2) - ANSWERS-8%.
For those whose full retirement age is 66, they will receive an 8% "raise" for each year they
delay filing after FRA, up until a maximum age of 70. This equals to a total increase of 32%
above their primary insurance amount (PIA).
Delaying receipt of benefits (for example until age 70) will result in all of the following except(LO
3-2) - ANSWERS-permanently reduced benefit amount.
Delaying receipt of benefits will allow you to earn delayed retirement credits, and your future
cost-of-living adjustments will be higher because they will be based on a higher base. Also, the
increased base will ultimately be used to determine survivor benefits.
, The following will result if you delay receipt of benefits until 70 (LO 3-2) - ANSWERS-higher
annual cost-of-living adjustments.
receipt of delayed retirement credits.
larger survivor benefits for the surviving spouse.
Ann, who was born in 1953, has reached her full retirement age (FRA):
age 66 in 2019. She can elect to receive $1,000 now, or delay receipt by two years. She expects
to live until age 90. Ignoring outside factors, when should she begin her benefits?(LO 3-3) -
ANSWERS-two years from now
By delaying two years, her benefit will increase 16%, to $1,160. Forfeiting: $1,000 × 24 months =
$24,000 Gaining: $160/month 24,000 / $160 = 150 months or 12.5 years Ann would need to live
until 78½ to "break even." Because she is expecting to live until age 90, she should opt to delay
receipt of benefits.
Michael, a 62-year-old single man, is considering beginning his Social Security benefits to
supplement his income of $14,000 per year. How much will he lose in Social Security benefits
due to the earned income restrictions?(LO 3-4) - ANSWERS-Nothing because his income is
below $17,640(earnings cap for singles)
If provisional income exceeds the thresholds given, then a maximum of ___________ of Social
Security benefits are subject to taxation.(LO 3-3) - ANSWERS-85%
Brent and Carol have an AGI of $40,000 and they receive a combined Social Security benefit of
$15,000. They have no tax-exempt income. What percentage of their Social Security benefit will
be subject to taxation?(LO 3-3) - ANSWERS-85%
