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Free CFP Practice Questions

10 free, exam-style Certified Financial Planner (CFP) practice questions with answers and explanations. No signup required. Work through them below, then take the full free CFP practice test to study every exam domain.

Question 1

Maria, age 62, is considering claiming Social Security. Her Full Retirement Age is 67, and her Primary Insurance Amount (PIA) is $2,400 per month. If Maria claims benefits now at age 62, what will her approximate monthly benefit be?

  1. $1,680 - a 30% permanent reduction
  2. $1,800 - a 25% permanent reduction
  3. $1,920 - a 20% permanent reduction
  4. $2,040 - a 15% permanent reduction
Show answer & explanation

Correct answer: A - $1,680 - a 30% permanent reduction

Question 2

James, born March 12, 1960, has a traditional IRA valued at $640,000 as of December 31 of the prior year. He has no spouse beneficiary. Under SECURE 2.0, at what age must James begin taking Required Minimum Distributions, and using the Uniform Lifetime Table divisor of 24.6 for that age, what is his approximate first-year RMD?

  1. Age 73; approximately $26,016
  2. Age 75; approximately $26,016
  3. Age 72; approximately $27,826
  4. Age 75; approximately $28,444
Show answer & explanation

Correct answer: B - Age 75; approximately $26,016

Question 3

Dr. Patel, age 52, is a self-employed physician with $310,000 in net self-employment income after the deductible portion of self-employment tax. She has no employees. She wants to maximize her retirement contributions this year. Which plan structure and approximate maximum contribution would BEST achieve her goal?

  1. SEP-IRA: $69,000 (25% of compensation up to the annual additions limit)
  2. Solo 401(k): $100,500 ($23,000 employee deferral + $7,500 catch-up + $69,000 employer match)
  3. Solo 401(k): $30,500 employee deferral + employer contribution of 25% of net SE income, totaling approximately $108,000
  4. Solo 401(k): $30,500 employee deferral + employer contribution of 25% of net SE income, capped at a combined total of $76,500
Show answer & explanation

Correct answer: D - Solo 401(k): $30,500 employee deferral + employer contribution of 25% of net SE income, capped at a combined total of $76,500

Question 4

Linda received 500 shares of ABC stock as a gift from her mother. Her mother's adjusted basis was $30 per share, and the fair market value on the date of the gift was $22 per share. No gift tax was paid. Linda later sells all 500 shares for $26 per share. What is Linda's recognized gain or loss?

  1. $2,000 gain, using her mother's carryover basis of $30 per share
  2. $2,000 loss, using her mother's carryover basis of $30 per share
  3. $0 - the sale falls within the no-gain, no-loss range
  4. $2,000 gain, using the FMV basis of $22 per share
Show answer & explanation

Correct answer: C - $0 - the sale falls within the no-gain, no-loss range

Question 5

Kevin, a single filer, has $400,000 in a traditional IRA (all pre-tax contributions and earnings) and $6,000 in a new non-deductible traditional IRA contribution he made this year. He wants to convert only the $6,000 non-deductible contribution to a Roth IRA. Under the pro-rata rule, approximately how much of the $6,000 conversion will be taxable?

  1. $0 - the non-deductible contribution has already been taxed
  2. $5,911 - approximately 98.5% of the conversion is taxable
  3. $6,000 - the entire conversion is taxable because his traditional IRA balance exceeds $400,000
  4. $3,000 - exactly half is taxable under the proportional allocation method
Show answer & explanation

Correct answer: B - $5,911 - approximately 98.5% of the conversion is taxable

Question 6

A CFP® professional is evaluating two portfolio managers. Manager A achieved a return of 14% with a beta of 1.3. Manager B achieved a return of 11% with a beta of 0.9. The risk-free rate is 3% and the market return is 10%. Based on Jensen's Alpha, which manager demonstrated superior risk-adjusted performance?

  1. Manager A, with an alpha of +1.90% versus Manager B's alpha of +1.70%
  2. Manager B, with an alpha of +1.70% versus Manager A's alpha of +1.90%
  3. Manager A, with an alpha of +3.00% versus Manager B's alpha of +0.70%
  4. Manager B, with an alpha of +1.70% versus Manager A's alpha of +0.90%
Show answer & explanation

Correct answer: D - Manager B, with an alpha of +1.70% versus Manager A's alpha of +0.90%

Question 7

Rachel is a corporate attorney whose employer pays 100% of her group long-term disability insurance premiums. Rachel has never included these premiums in her gross income. She becomes disabled and begins receiving $6,500 per month in benefits. How are Rachel's disability benefits taxed?

  1. Tax-free, because disability benefits are excluded from gross income under IRC §104
  2. Taxed as ordinary income, because the employer paid the premiums with pre-tax dollars
  3. 50% taxable, applying the exclusion ratio based on employee vs. employer contribution
  4. Tax-free for the first 12 months, then taxable as ordinary income thereafter
Show answer & explanation

Correct answer: B - Taxed as ordinary income, because the employer paid the premiums with pre-tax dollars

Question 8

Tom and Sarah want to save for their daughter's college education, which begins in 18 years. The current annual cost is $32,000, and education costs are expected to increase at 5% per year. They want to make equal beginning-of-year contributions to a 529 plan earning 7% annually to fully fund the first year's inflated tuition cost. What is the approximate required annual contribution?

  1. $2,108
  2. $2,254
  3. $4,282
  4. $1,969
Show answer & explanation

Correct answer: B - $2,254

Question 9

A married client, age 68, owns a $4 million life insurance policy and is concerned about estate taxes. She wants to remove the policy from her gross estate while providing her three adult children with annual withdrawal rights to qualify contributions as present-interest gifts for the annual exclusion. Which trust is MOST appropriate?

  1. Revocable living trust with a pour-over provision
  2. Irrevocable Life Insurance Trust (ILIT) with Crummey withdrawal powers
  3. Charitable Remainder Unitrust (CRUT) naming the children as income beneficiaries
  4. Qualified Personal Residence Trust (QPRT) with a 15-year retained interest
Show answer & explanation

Correct answer: B - Irrevocable Life Insurance Trust (ILIT) with Crummey withdrawal powers

Question 10

During a portfolio review, a client tells his CFP® professional: 'I know my tech stocks are down 40%, but I bought them at $120 per share and I just can't sell below my purchase price - I'll wait for them to come back.' This behavior BEST illustrates which combination of behavioral biases?

  1. Overconfidence bias and herding behavior
  2. Anchoring bias and loss aversion
  3. Representativeness heuristic and mental accounting
  4. Status quo bias and availability heuristic
Show answer & explanation

Correct answer: B - Anchoring bias and loss aversion

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