CFP Exam – Sample Questions

1. Thomas dies in 2026 with an estate valued at $8,000,000. His will establishes a Qualified Terminable Interest Property (QTIP) trust for the benefit of his surviving spouse, Linda. The executor elects QTIP treatment on the estate tax return.

Which of the following conditions must be satisfied for the trust to qualify for the marital deduction as a QTIP trust?

2. Natalie has actively managed her personal equity portfolio for several years. Over the past 12 months, she has experienced a series of strong gains, significantly outperforming the broader market. As a result, she has become increasingly confident in her stock-picking abilities and is considering allocating a larger portion of her portfolio to concentrated, high-risk positions.  A CFP® professional recognizes that Natalie’s recent success may be influencing her judgment.

Which of the following recommendations are most appropriate for the CFP® professional to provide?

I. Encourage Natalie to evaluate both her successful and unsuccessful investment decisions to gain a balanced perspective
II. Support increasing portfolio risk exposure to capitalize on her demonstrated investment skill
III. Reinforce that sustained outperformance is difficult to achieve consistently over the long term
IV. Emphasize maintaining optimism to support continued confidence in her investment strategy

3. Laura, a CFP® professional, assists her client, Michelle, in applying for a life insurance policy. During the application process, Laura records Michelle’s age as 38 without verifying documentation, even though Michelle is actually 43.  The insurer’s premium rates are $18 per $1,000 of coverage at age 38 and $30 per $1,000 at age 43. Based on the misstated age, Michelle applies for a $300,000 policy and pays an annual premium of $5,400 (calculated using the lower rate).  Michelle dies unexpectedly one year later, and the insurer discovers the age discrepancy during the claims process.

Which of the following statements is correct?

4. Anderson Capital manages an aggressive equity portfolio that has achieved a mean monthly return of 1.6% with a standard deviation of returns of 11.5%. Meanwhile, Parker Asset Management oversees a balanced portfolio of stocks and bonds that has achieved a mean monthly return of 1.3% with a standard deviation of returns of 7.0%. The mean monthly return on U.S. Treasury bills has been 0.4%.

Based on the Sharpe ratio, which of the following statements is correct?

5. A corporate bond currently trades at $980 and has a duration of 4.8 years using annual compounding. The bond’s current yield to maturity (YTM) is 7%. Assuming interest rates immediately decline by 0.75% (75 basis points), what is the approximate new price of the bond using the duration-based price change approximation formula?

6. Tyler, a CFP® professional, meets with a new client, Marcus. Marcus initially requested an automated asset allocation model for a legacy brokerage account. However, during their conversation, Tyler gathers extensive data regarding Marcus’s risk tolerance, asks about his timeline for retirement, and reviews his employer-sponsored 401(k) choices to ensure the new brokerage portfolio aligns with his overall retirement goals. Tyler does not draft a formal, written financial plan, nor does he explicitly state that he is acting as a financial planner in their engagement agreement. Marcus leaves the meeting under the impression that Tyler is structurally mapping out his retirement readiness.

According to the CFP Board’s Standards of Conduct, which of the following statements correctly evaluates whether Tyler is providing Financial Planning services, and what standard of conduct applies?

7. Michael and Sophia are a married couple who file a joint federal income tax return. In May 2026, they redeemed a qualified Series EE U.S. Savings Bond that had originally been issued when Michael was 30 years old.  Upon redemption, they received total proceeds of $12,000, consisting of:

• Original principal: $8,000
• Accrued interest: $4,000

Shortly thereafter, they paid $9,600 toward their dependent son's undergraduate college tuition.

Assume the following:

• The couple will not claim either the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC).
• Their son did not receive any tax-free scholarships, grants, or employer-provided educational assistance.
• Their Modified Adjusted Gross Income (MAGI) for 2026 is $125,000.

How much of the bond interest may Michael and Sophia exclude from their 2026 gross income?

8. Nathan, a certified public accountant, is evaluating whether to terminate the S corporation election for his accounting practice and operate the business as a C corporation instead. Nathan will be the corporation's sole shareholder and sole employee. He is currently in the 35% marginal federal income tax bracket.

Which of the following statements correctly describes the federal income tax treatment of the corporation if the S election is revoked?

9. Elena worked for 30 years as a public school teacher in a state where her school district did not participate in the Social Security system. Earlier this year, she reached her Full Retirement Age (FRA) and began receiving a non-covered teacher's pension of $4,500 per month.  Prior to becoming a teacher, Elena worked in the private sector and earned sufficient Social Security credits to qualify for her own Primary Insurance Amount (PIA) of $900 per month.  Her husband, David, has also reached FRA and is currently receiving a Social Security retirement benefit of $3,200 per month based entirely on his own earnings record.  Elena files for a spousal Social Security benefit based on David's work record.

What is Elena's total monthly Social Security benefit under current law?

10. Raymond, age 56, separated from service earlier this year from his employer, a private logistics company where he worked for 12 years. His traditional 401(k) account balance is $400,000.  Raymond needs immediate access to $50,000 from the account to cover living expenses until payments from a nonqualified deferred compensation plan begin next year.  Raymond's brother, a retired public-sector firefighter, tells him that he can avoid the 10% early withdrawal penalty by first rolling the entire 401(k) balance into a traditional IRA and then taking the distribution from the IRA.

Which of the following statements correctly evaluates the income tax consequences of Raymond's options?

11. Robyn is working on his financial plan and wants to know how much should be allocated toward education savings. Robyn wants his son to attend his alma mater for five years, which costs $15,000/year in today's dollars. The cost of education is increasing by 7%/year and Robyn's son was just born and will begin university at age 18. Assume an average rate of return on his investments to pay for school of 11%.

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What will be the cost of education when Robyn's son turns 18 and begins his schooling?

12. Robyn is working on his financial plan and wants to know how much should be allocated toward education savings. Robyn wants his son to attend his alma mater for five years, which costs $15,000/year in today's dollars. The cost of education is increasing by 7%/year and Robyn's son was just born and will begin university at age 18. Assume an average rate of return on his investments to pay for school of 11%.

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What amount should Robyn have saved by the time his son turns 18 to pay for five years of school?

13. Robyn is working on his financial plan and wants to know how much should be allocated toward education savings. Robyn wants his son to attend his alma mater for five years, which costs $15,000/year in today's dollars. The cost of education is increasing by 7%/year and Robyn's son was just born and will begin university at age 18. Assume an average rate of return on his investments to pay for school of 11%.

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If Robyn plans to fund his son's education fund by saving monthly from his pay, how much does he need to save each month to reach the savings goal calculated in the previous question.

14. Harbor Design, Inc. sponsors a traditional 401(k) plan for its employees. The company has several highly compensated employees (HCEs), including its owner, Melissa, age 52. The company discovers in March 2026 that its 2025 plan year failed the ADP test because HCE elective deferrals were too high relative to NHCE deferrals.

Melissa wants to understand the company’s correction options and how to avoid the same issue in future years.

Additional facts:

• The plan year is the calendar year.
• The company discovers the failure on March 20, 2026.
• The company wants the least disruptive immediate correction for the 2026 failure.

Note: The Actual Deferral Percentage (ADP) test is a mandatory annual audit required by the IRS for traditional 401(k) plans. Its primary purpose is to ensure that a retirement plan remains nondiscriminatory—meaning it doesn't unfairly benefit high-earners at the expense of rank-and-file employees.

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Which corrective action would most directly reduce HCE deferrals to help Harbor Design fix its failed 2025 ADP test?

15. Harbor Design, Inc. sponsors a traditional 401(k) plan for its employees. The company has several highly compensated employees (HCEs), including its owner, Melissa, age 52. The company discovers in March 2026 that its 2025 plan year failed the ADP test because HCE elective deferrals were too high relative to NHCE deferrals.

Melissa wants to understand the company’s correction options and how to avoid the same issue in future years.

Additional facts:

• The plan year is the calendar year.
• The company discovers the failure on March 20, 2026.
• The company wants the least disruptive immediate correction for the 2026 failure.

Note: The Actual Deferral Percentage (ADP) test is a mandatory annual audit required by the IRS for traditional 401(k) plans. Its primary purpose is to ensure that a retirement plan remains nondiscriminatory—meaning it doesn't unfairly benefit high-earners at the expense of rank-and-file employees.

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Because Harbor Design discovered the failed 2025 ADP test on March 20, 2026, which statement is most accurate if the company now corrects the failure by distributing excess amounts?

16. Harbor Design, Inc. sponsors a traditional 401(k) plan for its employees. The company has several highly compensated employees (HCEs), including its owner, Melissa, age 52. The company discovers in March 2026 that its 2025 plan year failed the ADP test because HCE elective deferrals were too high relative to NHCE deferrals.

Melissa wants to understand the company’s correction options and how to avoid the same issue in future years.

Additional facts:

• The plan year is the calendar year.
• The company discovers the failure on March 20, 2026.
• The company wants the least disruptive immediate correction for the 2026 failure.

Note: The Actual Deferral Percentage (ADP) test is a mandatory annual audit required by the IRS for traditional 401(k) plans. Its primary purpose is to ensure that a retirement plan remains nondiscriminatory—meaning it doesn't unfairly benefit high-earners at the expense of rank-and-file employees.

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Melissa decides she does not want HCEs to receive refunds of excess deferrals. Which corrective approach would best address the failed ADP test by increasing NHCE deferral percentages instead?

17. Nicholas and Katie Madison have come to you for comprehensive financial planning advice on January 1, 2026. Nicholas is age 45 and earns $70,000 annually as vice president of Asher Bank and Trust. Katie, age 40, is returning to work as a part-time independent contractor architect and expects to earn at least $50,000 annually.

Nicholas participates in a 401(k) plan with a dollar-for-dollar employer match up to 3% of salary and currently contributes 3%.

Nicholas inherited several assets from his recently deceased mother Ruth, including:

• A nonqualified variable annuity valued at $126,000 with a $50,000 basis
• A nonqualified fixed annuity valued at $93,000 with a $40,000 basis
• A Roth IRA worth $50,000
• A mutual fund valued at $30,000

Assume the Madisons are in the 12% federal income tax bracket unless otherwise stated.

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Nicholas’s employer provides $60,000 of group term life insurance coverage. The employer pays the entire premium of $9 monthly. The Section 79 table cost for Nicholas’s age is $0.15 per $1,000 of protection monthly. Assuming Nicholas is not a highly compensated employee, what amount of annual imputed income will generally be taxable to Nicholas from the coverage?

18. Nicholas and Katie Madison have come to you for comprehensive financial planning advice on January 1, 2026. Nicholas is age 45 and earns $70,000 annually as vice president of Asher Bank and Trust. Katie, age 40, is returning to work as a part-time independent contractor architect and expects to earn at least $50,000 annually.

Nicholas participates in a 401(k) plan with a dollar-for-dollar employer match up to 3% of salary and currently contributes 3%.

Nicholas inherited several assets from his recently deceased mother Ruth, including:

• A nonqualified variable annuity valued at $126,000 with a $50,000 basis
• A nonqualified fixed annuity valued at $93,000 with a $40,000 basis
• A Roth IRA worth $50,000
• A mutual fund valued at $30,000

Assume the Madisons are in the 12% federal income tax bracket unless otherwise stated.

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Nicholas inherited a nonqualified variable annuity valued at $126,000 with a cost basis of $50,000. If Nicholas elects a lump-sum distribution, how much will generally be taxable as ordinary income?

19. Nicholas and Katie Madison have come to you for comprehensive financial planning advice on January 1, 2026. Nicholas is age 45 and earns $70,000 annually as vice president of Asher Bank and Trust. Katie, age 40, is returning to work as a part-time independent contractor architect and expects to earn at least $50,000 annually.

Nicholas participates in a 401(k) plan with a dollar-for-dollar employer match up to 3% of salary and currently contributes 3%.

Nicholas inherited several assets from his recently deceased mother Ruth, including:

• A nonqualified variable annuity valued at $126,000 with a $50,000 basis
• A nonqualified fixed annuity valued at $93,000 with a $40,000 basis
• A Roth IRA worth $50,000
• A mutual fund valued at $30,000

Assume the Madisons are in the 12% federal income tax bracket unless otherwise stated.

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Which statement best describes a key risk management advantage of Nicholas maintaining adequate emergency reserves despite inheriting investment assets?

20.

Case Sample – Victor and Renata Alvarez

Sofia plans to begin college in two years, when the current annual cost of attendance of $24,000 is expected to have increased at an assumed 5% annual education inflation rate. Calculate the projected cost of Sofia's first year of college.

21.

Case Sample – Victor and Renata Alvarez

Using the Alvarezes' Cash Flow Statement, calculate their current annual savings ratio (total annual savings divided by total annual gross income).

22.

Case Sample – Victor and Renata Alvarez

A prospective CFP® professional disclosed, as part of the standard background review, a Chapter 7 bankruptcy filed nine years ago and a single misdemeanor conviction for alcohol-related disorderly conduct while in college, unrelated to fraud, theft, or dishonesty. Neither disclosure involves an automatic bar under CFP Board's Fitness Standards. Which of the following BEST describes how CFP Board will likely treat this disclosure?

23.

Case Sample – Victor and Renata Alvarez

Victor's brother-in-law, a board member of a publicly traded company, told Victor in confidence that the company plans to announce disappointing earnings before the information is made public. Victor shared this with his CFP® professional and asked whether he should sell his shares before the announcement, and whether selling only half of his position, rather than his entire position, would change the analysis. Which of the following best describes the planner's obligation in this situation?