CRPC - Module 7 exam 2023/2024 with 100% correct answers

Describe the trend in early retirement for US workers approaching retirement age - correct answer Early retirement (full retirement) is on a decline Bridge Jobs = positions held between career and full retirement Retirees continue working part time - HCEs work longer Identify factors that would strengthen the argument for delayed retirement - correct answer 1. Defined contribution plans continue to displace defined benefit plans 2. Social Security benefits are subject to deductions if worker has not reached FRA and has excess earnings 3. "Delayed Retirement Credit": Social Security benefit increase for those who work past FRA 4. Social Security FRA is increased based on DOB Explain how the job market has grown friendlier toward older workers - correct answer Age discrimination laws Companies prefer part-time workers Skills and work ethic of older employees are appreciated More technology and less physical labor What are 4 key questions clients ask in making the decision to retire? - correct answer 1. Can I afford it? 2. Is this the right time? 3. How will my spouse/family be affected? 4. Do I want to retire? What resources should be considered when a client asks, "Can I afford to retire"? - correct answer A. Social Security Old-Age benefits B. Company pensions, IRAs, Tax-Deferred Annuities C. Other sources of income (eg. rental property) D. Personal savings in the form of cash value life ins, mutual funds, CDs, etc. What 2 time-related factors make early retirement financially challenging? - correct answer A. Fewer working years in which to accumulate personal assets, pension benefits, and social security credits B. More nonworking years to finance Explain how pension benefits are reduced by early retirement - correct answer 1. Recipients final compensation, or average 3 years of compensation 2. Years of service 3. Actuarial expectation of the number of years over which benefits will be paid. Explain the COBRA regulation that allows terminated employees to extend their medical coverage. - correct answer Consolidated Omnibus Budget Reconciliation Act Employers are required to provide continued coverage through group medical plans to employees and dependents without proof of insurability. If employee is terminated, dies, divorced/separated Coverage = 18 months Employee pays premium What are the tax consequences of a lump sum distribution from a qualified plan? How can they be avoided or reduced? - correct answer Distributions are fully includible in gross income tax in year received. To reduce or forestall taxes: 1. Rollover qualified plan benefits into an IRA or plan 2. Receive distribution as annuity over a period of years. Explain how defined benefit and defined contribution plan distributions to employees age 55 and older who are separated from service are ttreated in terms of premature distributions - correct answer Employees age 55 and older escape 10% penalty, but are subject to income tax Does NOT apply to distributions from IRAs, SEPs, SARSEPs, or SIMPLEs Describe the concept of substantially equal periodic payments and explain how this method might benefit certain early retirees. - correct answer A method for taking qualified plan distributions over participants remaining life (determined by IRS tables) Annual Payment = Amount of distribution/Life expectancy Two methods: Fixed Amortization and Fixed Annuitization