CFP Readiness Test

10 questions, balanced across the exam's topics. Answer each one, then submit for your practice readiness estimate and per-topic breakdown. This is a practice estimate — not a prediction or guarantee of your official exam result.

Question 1

What generally happens when pretax traditional IRA funds are converted to a Roth IRA?

The taxable converted amount enters ordinary income Only the account’s earnings are taxable, even if all original contributions were deducted The converted amount is deductible as a new Roth contribution The converted pretax amount is taxed only when later withdrawn from the Roth

Question 2

A pension formula is 1.5% times years of service times final average salary. With 20 years and $80,000 salary, what annual benefit results?

$40,000 $24,000 $1,200 $16,000

Question 3

What does a safe-harbor 401(k) design generally provide when requirements are satisfied?

Exemption from every retirement-plan law Guaranteed positive investment returns Unlimited employee deferrals Relief from certain nondiscrimination tests

Question 4

Can a business owner ignore otherwise eligible part-time employees when funding a SEP?

Yes; if contributions are made electronically No; statutory and plan eligibility rules must be applied Yes; part-time employees are always excluded Yes; only owners count as employees

Question 5

An owner assumes the entire business valuation will fund retirement. What should be deducted or tested?

Only the asking price, assuming every offer will be paid in cash at closing Only the appraised gross value, ignoring debt and transaction structure Only the owner’s annual salary, assuming it continues after the sale Taxes, transaction costs, debt, and uncertainty of sale proceeds

Question 6

Why should deferred compensation payouts be coordinated with other retirement income?

Payout timing has no tax effect Only the employer's deduction matters Large payments can affect tax brackets and income-related costs All deferred compensation is taxed at zero

Question 7

For a standard qualified Roth IRA distribution based on age, what is generally required?

The five-tax-year requirement and age 59½ Age 59½ alone, regardless of when the first Roth IRA was established Five tax years alone, regardless of age or any other qualifying event Age 50 plus one calendar year of Roth ownership

Question 8

Why is a self-employed owner's SEP percentage calculation not simply 25% of gross business receipts?

The calculation uses adjusted net earnings and a reduced rate formula Gross receipts always equal compensation The owner can contribute unlimited revenue All business expenses are ignored

Question 9

Why might essential expenses be matched with reliable income sources?

It makes discretionary spending unnecessary It guarantees a large inheritance It reduces dependence on volatile asset sales for basic needs It eliminates every inflation risk

Question 10

Why might a surviving spouse under 59½ retain inherited IRA status temporarily rather than immediately treating it as their own?

Inherited distributions may avoid the early-distribution additional tax while own-IRA withdrawals may not The spouse can never later choose another permitted option Own IRAs have no tax rules Inherited status makes all pretax income tax-free

Unanswered questions count as incorrect. Your answers are graded on the server; no answer key is sent to your browser.

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