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CFP Certification Exam: Retirement and Employee Benefits
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The CFP Certification Exam in the U.S. covers Retirement Planning and Employee Benefits as a major domain, focusing on qualified/non-qualified plans, Social Security, Medicare, and distribution strategies. It tests expertise in analyzing retirement needs, tax-advantaged savings options, and advising clients on maximizing benefits, typically comprising a significant portion of the 170-question, 6-hour exam.  Key Content Areas: Retirement and Employee Benefits Retirement Needs Analysis: Calculating required capital, retirement income goals, and analyzing factors like inflation and investment... Show more
CFP Certification Exam: Retirement and Employee Benefits
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25 Questions

1. Which of the following are considered fiduciaries?
(1) A plan administrator, including any third-party administrator that is used by the employer
(2) A plan sponsor/employer, including its officers and/or directors
(3) An investment advisor that renders advice to the plan for a fee or other compensation
(4) A plan trustee
2. Which of the following is the contribution deadline to a SEP IRA?
3. Hardship withdrawals taken from a 401k plan are subject to a __________ premature distribution penalty.
4. Under the social security system, the full retirement age for an insured worker born in the year 1960 or after is age __________.
5. All but which of the following are characteristics of an employee stock purchase plan (ESPP)?
6. Which of the following are characteristics of group term life insurance?
(1) Relatively low cost to the employer
(2) Requires a medical exam for employees to qualify for coverage
(3) Possible loss of coverage when the employee terminates employment
(4) Possible restriction on the amount of coverage that may be obtained by the employee
7. Which of the following are characteristics of stock bonus plans?
(1) Protects company stock from hostile takeovers
(2) Provides a market for the owner’s closely held shares of stock
(3) Provides a tax advantage to employees through net unrealized appreciation
(4) Provides tax deductions while having no effect on cash flow
8. Which of the following are characteristics of restricted stock?
(1) Must be issued to employees on a nondiscriminatory basis
(2) Used as a form of incentive compensation for key employees
(3) Subject to substantial risk of forfeiture so income (value of the shares) is not recognized at the time of the award
(4) When no longer subject to risk of forfeiture, the value of the stock is recognized as ordinary income to the employee and is not deductible by the employer
9. Which of the following is the tax consequence if an employer provides group prepaid legal services as a fringe benefit to an employee? Assume the employer pays for the entire benefit.
10. All but which of the following are correct regarding nonqualified deferred compensation plans?
11. Which of the following is/are correct regarding profit sharing plans?
(1) Company profits are required to make contributions to a profit sharing plan.
(2) Profit sharing plans are best suited for companies with unstable cash flows.
12. Which of the following is the penalty for a premature distribution from a qualified plan, 403b plan, IRA, or SEP?
13. Which of the following is/are correct regarding loans from a 401k plan?
(1) A loan from a 401k plan cannot exceed $50,000 or 50% of the participant’s vested benefit.
(2) If a participant’s vested amount is $15,000 or less, the entire amount can be made available for loan without regard to the 50% restriction.
14. Only the first __________ of ISO stock granted to an employee, which becomes exercisable for the first time during any single year, is entitled to favorable ISO treatment.
15. The cost of employer-provided life insurance coverage up to __________on dependents is excludible from income as a de minimis fringe benefit. The cost of coverage over the threshold is fully taxable to the employee.
16. The excise tax for over contributing to an IRA will be imposed on a taxpayer:
17. In which of the following qualified retirement plans are the employees responsible for the investment risk?
(1) Money purchase plans
(2) Target benefit plans
(3) Defined benefit plans
(4) Cash balance plans
18. For COBRA continuation coverage, a terminating employee must pay the employer’s share of insurance premiums, but the total cost may not exceed __________ of the overall cost of providing coverage to employees.
19. Hardship withdrawals from a 401k plan can only occur after a participant has demonstrated to the plan administrator which of the following?
20. In which of the following circumstances does a substantial risk of forfeiture not exist?
21. An employee will not be taxed on compensation if which of the following conditions are satisfied?
22. Group paid-up life insurance consists of which of the following?
23. Which of the following is/are correct regarding business overhead insurance?
(1) Business overhead insurance covers all ongoing business expenses during the time of an owner’s disability, and may reimburse the owner/employee for his or her salary during that time.
(2) Business overhead insurance is designed to cover the ongoing expenses of a business if the owner becomes disabled.
24. Which of the following is a deferred compensation plan under which an employee receives the benefits of stock ownership without actually receiving company stock? Benefits are measured by the increase in value of the employer’s stock.
25. Which of the following is/are correct regarding executive group carve-out plans?
(1) Executive group carve-out plans provide individual, discriminatory benefits to selected employees.
(2) The cost of coverage is excluded from the executive’s gross income.

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