Practice Test Geeks(CFG) Certified Financial Gerontologist Practice Test
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Retirement Income & Estate Planning Flashcards

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Read the first 7 Retirement Income & Estate Planning flashcards as text

  1. A 75-year-old client uses a reverse mortgage (HECM) to supplement retirement income. Which statement about HECMs is accurate?

    Answer: The loan becomes due when the borrower permanently leaves the home

    A HECM becomes due and payable when the last borrower permanently vacates the home, sells it, or passes away, not while the borrower lives there.

  2. Which Medicaid planning strategy involves transferring assets to a spouse in order to protect them from spend-down requirements, using the Community Spouse Resource Allowance (CSRA)?

    Answer: Spousal impoverishment protection

    Federal Medicaid spousal impoverishment rules allow the community (non-institutionalized) spouse to retain assets up to the CSRA without those assets being counted for the institutionalized spouse's eligibility.

  3. A client aged 82 owns a $500,000 annuity with a cost basis of $200,000. If she surrenders it, how is the $300,000 gain taxed?

    Answer: As ordinary income in the year of surrender

    Gains inside a non-qualified annuity are taxed as ordinary income when distributed, not at preferential capital gains rates.

  4. What is the look-back period Medicaid uses when reviewing asset transfers for potential disqualifying gifts prior to a nursing home application?

    Answer: 60 months

    Medicaid reviews asset transfers made within the 60-month (5-year) look-back period prior to application, and gifts during that window may create a penalty period of ineligibility.

  5. A 70-year-old client asks about qualified longevity annuity contracts (QLACs). Which feature distinguishes a QLAC from a standard IRA annuity?

    Answer: QLAC premiums are excluded from RMD calculations up to IRS limits and payments can be deferred to age 85

    QLACs allow retirees to defer income to as late as age 85, and the premium used to purchase a QLAC is excluded from the RMD calculation up to IRS limits.

  6. Under portability rules, a surviving spouse may elect to use a deceased spouse's unused federal estate tax exemption (DSUE). What must the executor do to preserve portability?

    Answer: File a federal estate tax return (Form 706) within 9 months of death (or extended deadline)

    To elect portability and preserve the DSUE amount, the executor must timely file a federal estate tax return (Form 706) even if the estate is below the filing threshold.

  7. A financial gerontologist recommends a systematic withdrawal strategy (SWS) from a client's portfolio. The '4% rule' was designed to sustain withdrawals for how long?

    Answer: 30 years

    The 4% rule, based on the Bengen study, was designed to sustain inflation-adjusted withdrawals for a 30-year retirement period without depleting the portfolio.