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CRPC FINAL EXAM 2025 NEWEST EXAM FORM A AND B
COMPLETE 500 QUESTIONS WITH DETAILED VERIFIED
ANSWERS (100% CORRECT ANSWERS) /ALREADY GRADED
A+
A ____ penalty is imposed for failing to take the required minimum distribution (RMD). -
ANSWER - 50% The penalty for failing to take the RMD is 50% of the difference between
what should have been taken and what was taken.
A ________ is exempt from the stringent requirements set by the Internal Revenue Code and
the Employee Retirement Security Act of 1974 (ERISA). - ANSWER - deferred compensation
plan Nonqualified plans, such as deferred compensation plans, are typically designed to
avoid these requirements and benefit only certain employees. Nonqualified plans do not
allow the employer to deduct the costs associated with the plan.
A _________ plan is a type of qualified plan that provides definitely determinable benefits. -
ANSWER - cash balance plan A cash balance plan is a type of pension plan. All pension
plans must provide for benefits that are definitely determinable.
A "rising equity glidepath" typically will lead to a(n) equity exposure over one's lifetime. -
ANSWER - decreased The strategy of increasing equity exposure throughout retirement can
result in less equity exposure over one's lifetime due to the reduced exposure in the early
years.
A bond has a duration of 8 years. If market interest rates rise by 1%, the percentage price
change of the bond is approximately - ANSWER - an 8% decline. The approximate
percentage price change in the bond is: 8 duration * 1% rise in rates = -8% price move
A bond portfolio strategy that splits the portfolio between _____________ bonds is referred
to as a barbell strategy. - ANSWER - short-term and long-term A barbell strategy splits the
bond portion of a portfolio between short-term and long-term bonds. Both ends may then
stagger maturities similar to the ladder strategy. For example, the short-term end may be
constructed with bonds of maturities five years or less and the long-term end may be
constructed with bonds of maturities greater than 10 years.
A cash balance pension plan - ANSWER - is a defined benefit plan with design features
similar to a defined contribution plan. There is generally a hypothetical account for each
participant. The annual employer contributions must reflect a uniform allocation formula
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based on compensation or a flat dollar amount. When a cash balance plan provides that
the employer contribution is based upon a percentage of compensation—for example
8%—the plan is a career average pay plan. Interest credited to participants' "accounts" is
usually specified in the plan document as a fixed rate—for example 6%.
A characteristic of an unfunded excess Benefit Plan - ANSWER - Unfunded excess benefit
plans need not comply with either the disclosure or reporting requirements of erisa
a correct statement regarding Roth 401(k)s? - ANSWER - A Roth-only 401(k) plan is not
permitted. Therefore, a 401(k) contribution program must, at a minimum, give participants
the option of making pretax elective deferrals to the plan instead of after-tax Roth 401(k)
deferrals (or both).
A 401(k) may provide for automatic enrollment in the Roth 401(k) feature of the plan.
A participant cannot retroactively designate before-tax elective deferrals as Roth 401(k)
contributions.
A participant's employer must treat Roth 401(k) contributions as taxable income to the
participant at the time of contribution.
A direct rollover is a transaction in which benefits from a qualified plan are rolled over
directly to - ANSWER - another eligible retirement plan. A direct rollover may be
accomplished by any reasonable means of direct payment to an eligible retirement plan,
including a wire transfer or mailing of a check negotiable only by the plan's trustee. Using a
conduit IRA is a means of an indirect rollover.
A direct rollover may be accomplished by providing a distributee with a check payable to
the custodian or trustee of the rollover plan or IRA, and appropriate instructions. -
ANSWER - IRS regulations indicate that providing a distributee with a check made payable
to a trustee for delivery is an acceptable way to accomplish a direct rollover. Providing the
distributee with a check and instructing the distributee to deliver the check to the trustee
of an eligible retirement plan is a reasonable means of accomplishing a direct rollover.
Under current rules, mandatory 20% withholding is imposed on a qualified plan or TSA
distribution (if the distribution is eligible for rollover treatment) if the plan issues a
distribution check to the participant (answer a.). Corrective distributions of excess
deferrals and hardship distributions from 401(k) plans (answers b. and c. respectively) do
not qualify as eligible rollover distributions.
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a disability income policy so as to be indemnified for income lost when he is unable to
work - ANSWER - The integration (coordination) of benefits clause generally reduces the
policy's benefits by any amount received from Social Security or workers' compensation,
but not by the amount of benefits received from other personally owned insurance
policies. The coordination of benefits clause may also reduce benefits to the extent state
disability payments are made and, if the policy is a group policy, by any pension benefits
received by the disabled employee from a plan provided by the same employer. The
elimination period is the period of time after the disability occurs and before payments
begin. The elimination period should not be confused with the probation period, which is
the period of time between the issue of the policy and when specified disabilities are
covered. A social insurance rider is often added to individual policies to reduce the
premium; it is similar to a coordination of benefits provision.
A social insurance rider (a type of contract) is sometimes added to a disability insurance
policy to make sure that individuals who are insured receive the full amount of their
benefits in the event that the Social Security Administration or worker's compensation
board denies their disability claim. However, any amount received in the form of
government disability benefits offsets the amount of social insurance rider disability
benefits that an individual is entitled to receive.
A residual disability benefit pays when the insured is not totally disabled, but nonetheless
suffers a decrease in income as a result of a disability.
A fixed benefit formula - ANSWER - provides a benefit based on a participant's average
compensation.
A Medicare Part A patient must pay - ANSWER - 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 skilled 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.
a Medigap insurance policy is designed to cover which one of the following Medicare-
approved charges that are not paid by Medicare? - ANSWER - deductibles or coinsurance
amounts The costs not covered by either Part A or Part B of Medicare are referred to as
Medicare gaps or Medigaps. Medigap insurance is designed to supplement Medicare's
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benefits by filling in some of what Medicare does not cover. A Medigap policy pays for
Medicare-approved charges that are not paid by Medicare because of deductibles or
coinsurance amounts for which the beneficiary is responsible. The cost and services
covered by Medigap policies varies from vendor to vendor and from plan to plan. Some, but
not all, Medigap policies cover such items as at-home recovery deductibles, skilled
nursing coinsurance amounts, and Medicare Part B excess amounts.
A non-springing durable power of attorney - ANSWER - remains effective after the principal
becomes incapacitated. 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, and is effective immediately in this type of power of attorney.
a participant in a qualified retirement plan who has a domestic partner? - ANSWER - he
participant may name the partner as sole beneficiary of the plan benefits, but is not
required to do so.
A person that has attained his or her Social Security full retirement age will __________
earned in excess of the annual limit on earned income ($41,880 in 2015). - ANSWER - incur
no reduction on income The Senior Citizen's Freedom to Work Act of 2000 repealed the
Social Security retirement earnings limit on the amount that a person who has attained his
or her Social Security full retirement age may earn without having their Social Security
benefits reduced.
They do lose if: lose $1.00 of benefit for every $2.00 This applies to individuals who are
under full retirement age. lose $1.00 of benefit for every $3.00 This applies to the earnings
in the months just prior to an individual reaching his or her full retirement age.
A portfolio contains stock A (40%) and stock B (60%). If the beta of stock A is 0.80 and the
beta of stock B is 1.20, what is the portfolio beta? - ANSWER - The portfolio beta is the
weighted average of the betas of the assets in the portfolio:
Portfolio beta = 0.4(0.80) + 0.6(1.20) = 1.04
A properly designed death benefit only (DBO) plan is excluded from federal estate tax if the
employee participant owns what percentage of a closely held corporation's stock? -
ANSWER - 50% or less
CRPC FINAL EXAM 2025 NEWEST EXAM FORM A AND B
COMPLETE 500 QUESTIONS WITH DETAILED VERIFIED
ANSWERS (100% CORRECT ANSWERS) /ALREADY GRADED
A+
A ____ penalty is imposed for failing to take the required minimum distribution (RMD). -
ANSWER - 50% The penalty for failing to take the RMD is 50% of the difference between
what should have been taken and what was taken.
A ________ is exempt from the stringent requirements set by the Internal Revenue Code and
the Employee Retirement Security Act of 1974 (ERISA). - ANSWER - deferred compensation
plan Nonqualified plans, such as deferred compensation plans, are typically designed to
avoid these requirements and benefit only certain employees. Nonqualified plans do not
allow the employer to deduct the costs associated with the plan.
A _________ plan is a type of qualified plan that provides definitely determinable benefits. -
ANSWER - cash balance plan A cash balance plan is a type of pension plan. All pension
plans must provide for benefits that are definitely determinable.
A "rising equity glidepath" typically will lead to a(n) equity exposure over one's lifetime. -
ANSWER - decreased The strategy of increasing equity exposure throughout retirement can
result in less equity exposure over one's lifetime due to the reduced exposure in the early
years.
A bond has a duration of 8 years. If market interest rates rise by 1%, the percentage price
change of the bond is approximately - ANSWER - an 8% decline. The approximate
percentage price change in the bond is: 8 duration * 1% rise in rates = -8% price move
A bond portfolio strategy that splits the portfolio between _____________ bonds is referred
to as a barbell strategy. - ANSWER - short-term and long-term A barbell strategy splits the
bond portion of a portfolio between short-term and long-term bonds. Both ends may then
stagger maturities similar to the ladder strategy. For example, the short-term end may be
constructed with bonds of maturities five years or less and the long-term end may be
constructed with bonds of maturities greater than 10 years.
A cash balance pension plan - ANSWER - is a defined benefit plan with design features
similar to a defined contribution plan. There is generally a hypothetical account for each
participant. The annual employer contributions must reflect a uniform allocation formula
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based on compensation or a flat dollar amount. When a cash balance plan provides that
the employer contribution is based upon a percentage of compensation—for example
8%—the plan is a career average pay plan. Interest credited to participants' "accounts" is
usually specified in the plan document as a fixed rate—for example 6%.
A characteristic of an unfunded excess Benefit Plan - ANSWER - Unfunded excess benefit
plans need not comply with either the disclosure or reporting requirements of erisa
a correct statement regarding Roth 401(k)s? - ANSWER - A Roth-only 401(k) plan is not
permitted. Therefore, a 401(k) contribution program must, at a minimum, give participants
the option of making pretax elective deferrals to the plan instead of after-tax Roth 401(k)
deferrals (or both).
A 401(k) may provide for automatic enrollment in the Roth 401(k) feature of the plan.
A participant cannot retroactively designate before-tax elective deferrals as Roth 401(k)
contributions.
A participant's employer must treat Roth 401(k) contributions as taxable income to the
participant at the time of contribution.
A direct rollover is a transaction in which benefits from a qualified plan are rolled over
directly to - ANSWER - another eligible retirement plan. A direct rollover may be
accomplished by any reasonable means of direct payment to an eligible retirement plan,
including a wire transfer or mailing of a check negotiable only by the plan's trustee. Using a
conduit IRA is a means of an indirect rollover.
A direct rollover may be accomplished by providing a distributee with a check payable to
the custodian or trustee of the rollover plan or IRA, and appropriate instructions. -
ANSWER - IRS regulations indicate that providing a distributee with a check made payable
to a trustee for delivery is an acceptable way to accomplish a direct rollover. Providing the
distributee with a check and instructing the distributee to deliver the check to the trustee
of an eligible retirement plan is a reasonable means of accomplishing a direct rollover.
Under current rules, mandatory 20% withholding is imposed on a qualified plan or TSA
distribution (if the distribution is eligible for rollover treatment) if the plan issues a
distribution check to the participant (answer a.). Corrective distributions of excess
deferrals and hardship distributions from 401(k) plans (answers b. and c. respectively) do
not qualify as eligible rollover distributions.
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a disability income policy so as to be indemnified for income lost when he is unable to
work - ANSWER - The integration (coordination) of benefits clause generally reduces the
policy's benefits by any amount received from Social Security or workers' compensation,
but not by the amount of benefits received from other personally owned insurance
policies. The coordination of benefits clause may also reduce benefits to the extent state
disability payments are made and, if the policy is a group policy, by any pension benefits
received by the disabled employee from a plan provided by the same employer. The
elimination period is the period of time after the disability occurs and before payments
begin. The elimination period should not be confused with the probation period, which is
the period of time between the issue of the policy and when specified disabilities are
covered. A social insurance rider is often added to individual policies to reduce the
premium; it is similar to a coordination of benefits provision.
A social insurance rider (a type of contract) is sometimes added to a disability insurance
policy to make sure that individuals who are insured receive the full amount of their
benefits in the event that the Social Security Administration or worker's compensation
board denies their disability claim. However, any amount received in the form of
government disability benefits offsets the amount of social insurance rider disability
benefits that an individual is entitled to receive.
A residual disability benefit pays when the insured is not totally disabled, but nonetheless
suffers a decrease in income as a result of a disability.
A fixed benefit formula - ANSWER - provides a benefit based on a participant's average
compensation.
A Medicare Part A patient must pay - ANSWER - 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 skilled 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.
a Medigap insurance policy is designed to cover which one of the following Medicare-
approved charges that are not paid by Medicare? - ANSWER - deductibles or coinsurance
amounts The costs not covered by either Part A or Part B of Medicare are referred to as
Medicare gaps or Medigaps. Medigap insurance is designed to supplement Medicare's
, 4 of 74
benefits by filling in some of what Medicare does not cover. A Medigap policy pays for
Medicare-approved charges that are not paid by Medicare because of deductibles or
coinsurance amounts for which the beneficiary is responsible. The cost and services
covered by Medigap policies varies from vendor to vendor and from plan to plan. Some, but
not all, Medigap policies cover such items as at-home recovery deductibles, skilled
nursing coinsurance amounts, and Medicare Part B excess amounts.
A non-springing durable power of attorney - ANSWER - remains effective after the principal
becomes incapacitated. 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, and is effective immediately in this type of power of attorney.
a participant in a qualified retirement plan who has a domestic partner? - ANSWER - he
participant may name the partner as sole beneficiary of the plan benefits, but is not
required to do so.
A person that has attained his or her Social Security full retirement age will __________
earned in excess of the annual limit on earned income ($41,880 in 2015). - ANSWER - incur
no reduction on income The Senior Citizen's Freedom to Work Act of 2000 repealed the
Social Security retirement earnings limit on the amount that a person who has attained his
or her Social Security full retirement age may earn without having their Social Security
benefits reduced.
They do lose if: lose $1.00 of benefit for every $2.00 This applies to individuals who are
under full retirement age. lose $1.00 of benefit for every $3.00 This applies to the earnings
in the months just prior to an individual reaching his or her full retirement age.
A portfolio contains stock A (40%) and stock B (60%). If the beta of stock A is 0.80 and the
beta of stock B is 1.20, what is the portfolio beta? - ANSWER - The portfolio beta is the
weighted average of the betas of the assets in the portfolio:
Portfolio beta = 0.4(0.80) + 0.6(1.20) = 1.04
A properly designed death benefit only (DBO) plan is excluded from federal estate tax if the
employee participant owns what percentage of a closely held corporation's stock? -
ANSWER - 50% or less
