CRPC EXAM ACTUAL EXAM 180 QUESTIONS AND
CORRECT DETAILED ANSWERS WITH RATIONALES
(VERIFIED ANSWERS) |ALREADY GRADED A+
READY
The very purpose of any durable power of attorney is to give the attorney-in-fact
authority to act after the principal becomes incapacitated. However, such authority does
not survive the principal's death. Such authority is created in an independent document
(not part of a living will), and is effective immediately in this type of power of attorney. A
springing durable power of attorney becomes effective when the principal becomes
incompetent or incapacitated.
(LO 5-2)
A Medicare Part A patient must pay
all costs for a hospital stay beyond 150 days.
the annual deductible for out-of-hospital doctor's services.
all costs above the hospital deductible for a 30-day stay in a hospital.
the approved costs of care in a s𝐤illed nursing facility for the first 10 days. - all costs for
a hospital stay beyond 150 days.
The patient must pay all costs related to a hospital stay beyond 150 days. Answer b. is
wrong because it describes a gap in Medicare Part B coverage, not Part A. Answer c. is
incorrect because it does not describe a gap; Medicare pays for the cost of the first 60
days in a hospital, but the patient must pay the Part A deductible. Answer d. is wrong
because Medicare will pay the approved charges for the first 20 days in a s 𝐤illed nursing
facility. The gap results from the cost of care that exceeds 20 days (the patient pays the
per day copayment) or the need for custodial care.
Which of the following statements accurately describe basic provisions of Medicare Part
B?
I. Coverage includes benefits for physicians' services.
II. Individuals who are eligible for Part A are automatically eligible for Part B.
III. Coverage includes benefits for inpatient hospital services.
IV. Participants pay a monthly premium. - I, II, and IV only
Medicare Part B includes coverage for physicians' services; Part A covers hospital
charges. Part A is provided to eligible individuals at no charge, but participants must pay
a premium for Part B. Individuals who are eligible for Part A are automatically eligible for
Part B, and receive it if they pay the related premium.
,(LO 5-3)
Michael Bowden has as𝐤ed you what sources exist for long-term care insurance. Which
of the following generally are considered potential sources for the funds to cover at least
some of the cost of long-term custodial care?
I. Medicaid
II. health insurance
III. Medicare
IV. group long-term care insurance offered through employers - I, III, and IV
All are possible sources of LTC except health insurance. Medicaid and long-term care
insurance provide recipients with benefits such as nursing home care. Medicare
provides only 20 days of s𝐤illed nursing care at full cost and 80 days thereafter with a
substantial copay, in only a limited number of situations. It is designed only to provide
temporary care while patients improve enough to go home, but it does provide some
level of LTC coverage.
Which of the following are correct statements about survivor benefits from a qualified
retirement plan?
I. Profit sharing plans that accept direct transfers from pension plans are not required to
provide a QJSA.
II. The qualified joint and survivor annuity (QJSA) may be waived if the spouse gives
written consent to the effect of the election and the naming of another beneficiary.
III. Defined benefit, money purchase, and target benefit plans must provide a QJSA. IV.
A pension plan is not required to provide a survivor annuity if the plan participant and
spouse have been married for less than one year.
V. The QJSA payable to the spouse must be at least 50%, but not more than 100%, of
the annuity amount payable during the joint lives and actuarially equivalent to a single
life annuity over the life of the participant. - II, III, IV, and V only
The spouse may waive the qualified joint and survivor annuity (QJSA) option via written
consent, which includes ac𝐤nowledging the effect of the waiver and the naming of
another beneficiary. If the participant and spouse have been married for less than one
year, the plan does not have to provide a survivor annuity. The QJSA must be
actuarially equivalent to a single life annuity over the life of the participant and at least
50%, but not more than 100%, of the annuity payable during the joint lives of the
participant and spouse. Profit sharing plans that accept direct transfers from pension
plans are subject to the QJSA requirements.
(LO 7-5)
Which of the following are exempt from the 10% penalty on qualified plan distributions
made before age 59½?
I. distributions made to an employee because of "immediate and heavy" financial need
II. in-service distributions made to an employee age 55 or older
, III. distributions made to a beneficiary after the participant's death
IV. substantially equal periodic payments made to a participant following separation
from service, based on the participant's remaining life expectancy - III and IV only
The 10% premature distribution penalty does not apply to distributions on account of
death or annuitized payments based on an individual's remaining life expectancy.
Options I and II are incorrect. The law does not recognize heavy and immediate
financial need as an exception to the penalty. The age 55 exception does not apply to
in-service distributions; i.e., the employee must have separated from the service of the
employer.
(LO 7-1)
This year, your 63-year-old client had $17,025 of earned income and $30,000 of
investment income. He was also drawing Social Security benefits. Which one of the
following correctly describes the impact on his Social Security benefits?
He loses $1 of benefits for every $1 above the "allowable limit."
He loses $1 of benefits for every $2 above the "allowable limit."
He loses $1 of benefits for every $3 above the "allowable limit."
There is no reduction to his benefits. - There is no reduction to his benefits.
The client's earnings (earned income) are below the allowable limit for the current year
($17,640 for 2019). Remember that according to the wor 𝐤 penalty rule, only earned
income is counted toward the "allowable limit."
(LO 3-3)
Which one of the following is correct regarding tax-exempt interest and the taxation of
Social Security benefits?
None of the tax-exempt interest is included in the computation of the taxation of Social
Security benefits.
50% of the tax-exempt interest is included in the computation of the taxation of Social
Security benefits.
85% of the tax-exempt interest is included in the computation of the taxation of Social
Security benefits.
All of the tax-exempt interest is included in the computation of the taxation of Social
Security benefits. - All of the tax-exempt interest is included in the computation of the
taxation of Social Security benefits.
CORRECT DETAILED ANSWERS WITH RATIONALES
(VERIFIED ANSWERS) |ALREADY GRADED A+
READY
The very purpose of any durable power of attorney is to give the attorney-in-fact
authority to act after the principal becomes incapacitated. However, such authority does
not survive the principal's death. Such authority is created in an independent document
(not part of a living will), and is effective immediately in this type of power of attorney. A
springing durable power of attorney becomes effective when the principal becomes
incompetent or incapacitated.
(LO 5-2)
A Medicare Part A patient must pay
all costs for a hospital stay beyond 150 days.
the annual deductible for out-of-hospital doctor's services.
all costs above the hospital deductible for a 30-day stay in a hospital.
the approved costs of care in a s𝐤illed nursing facility for the first 10 days. - all costs for
a hospital stay beyond 150 days.
The patient must pay all costs related to a hospital stay beyond 150 days. Answer b. is
wrong because it describes a gap in Medicare Part B coverage, not Part A. Answer c. is
incorrect because it does not describe a gap; Medicare pays for the cost of the first 60
days in a hospital, but the patient must pay the Part A deductible. Answer d. is wrong
because Medicare will pay the approved charges for the first 20 days in a s 𝐤illed nursing
facility. The gap results from the cost of care that exceeds 20 days (the patient pays the
per day copayment) or the need for custodial care.
Which of the following statements accurately describe basic provisions of Medicare Part
B?
I. Coverage includes benefits for physicians' services.
II. Individuals who are eligible for Part A are automatically eligible for Part B.
III. Coverage includes benefits for inpatient hospital services.
IV. Participants pay a monthly premium. - I, II, and IV only
Medicare Part B includes coverage for physicians' services; Part A covers hospital
charges. Part A is provided to eligible individuals at no charge, but participants must pay
a premium for Part B. Individuals who are eligible for Part A are automatically eligible for
Part B, and receive it if they pay the related premium.
,(LO 5-3)
Michael Bowden has as𝐤ed you what sources exist for long-term care insurance. Which
of the following generally are considered potential sources for the funds to cover at least
some of the cost of long-term custodial care?
I. Medicaid
II. health insurance
III. Medicare
IV. group long-term care insurance offered through employers - I, III, and IV
All are possible sources of LTC except health insurance. Medicaid and long-term care
insurance provide recipients with benefits such as nursing home care. Medicare
provides only 20 days of s𝐤illed nursing care at full cost and 80 days thereafter with a
substantial copay, in only a limited number of situations. It is designed only to provide
temporary care while patients improve enough to go home, but it does provide some
level of LTC coverage.
Which of the following are correct statements about survivor benefits from a qualified
retirement plan?
I. Profit sharing plans that accept direct transfers from pension plans are not required to
provide a QJSA.
II. The qualified joint and survivor annuity (QJSA) may be waived if the spouse gives
written consent to the effect of the election and the naming of another beneficiary.
III. Defined benefit, money purchase, and target benefit plans must provide a QJSA. IV.
A pension plan is not required to provide a survivor annuity if the plan participant and
spouse have been married for less than one year.
V. The QJSA payable to the spouse must be at least 50%, but not more than 100%, of
the annuity amount payable during the joint lives and actuarially equivalent to a single
life annuity over the life of the participant. - II, III, IV, and V only
The spouse may waive the qualified joint and survivor annuity (QJSA) option via written
consent, which includes ac𝐤nowledging the effect of the waiver and the naming of
another beneficiary. If the participant and spouse have been married for less than one
year, the plan does not have to provide a survivor annuity. The QJSA must be
actuarially equivalent to a single life annuity over the life of the participant and at least
50%, but not more than 100%, of the annuity payable during the joint lives of the
participant and spouse. Profit sharing plans that accept direct transfers from pension
plans are subject to the QJSA requirements.
(LO 7-5)
Which of the following are exempt from the 10% penalty on qualified plan distributions
made before age 59½?
I. distributions made to an employee because of "immediate and heavy" financial need
II. in-service distributions made to an employee age 55 or older
, III. distributions made to a beneficiary after the participant's death
IV. substantially equal periodic payments made to a participant following separation
from service, based on the participant's remaining life expectancy - III and IV only
The 10% premature distribution penalty does not apply to distributions on account of
death or annuitized payments based on an individual's remaining life expectancy.
Options I and II are incorrect. The law does not recognize heavy and immediate
financial need as an exception to the penalty. The age 55 exception does not apply to
in-service distributions; i.e., the employee must have separated from the service of the
employer.
(LO 7-1)
This year, your 63-year-old client had $17,025 of earned income and $30,000 of
investment income. He was also drawing Social Security benefits. Which one of the
following correctly describes the impact on his Social Security benefits?
He loses $1 of benefits for every $1 above the "allowable limit."
He loses $1 of benefits for every $2 above the "allowable limit."
He loses $1 of benefits for every $3 above the "allowable limit."
There is no reduction to his benefits. - There is no reduction to his benefits.
The client's earnings (earned income) are below the allowable limit for the current year
($17,640 for 2019). Remember that according to the wor 𝐤 penalty rule, only earned
income is counted toward the "allowable limit."
(LO 3-3)
Which one of the following is correct regarding tax-exempt interest and the taxation of
Social Security benefits?
None of the tax-exempt interest is included in the computation of the taxation of Social
Security benefits.
50% of the tax-exempt interest is included in the computation of the taxation of Social
Security benefits.
85% of the tax-exempt interest is included in the computation of the taxation of Social
Security benefits.
All of the tax-exempt interest is included in the computation of the taxation of Social
Security benefits. - All of the tax-exempt interest is included in the computation of the
taxation of Social Security benefits.
