Video: Personal Financial Planning for Individuals - Practice Questions

Personal financial planning for individuals involves the strategic management of financial aspects in a person's life, including budgeting, saving, investing, retirement planning, and tax considerations, all intended to achieve personal economic goals and ensure financial security over the long term.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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It's time to run through some practice questions, more so practice scenarios here, dealing with personal financial planning for individuals. We've got the same provided information that we'll see in all of these various tasks. We've got multiple tasks that we will complete. So for all of these, we will see that we are dealing with Jane Smith, 40 year old woman, corporate manager, annual income of $100,000. What are her investment goals? Retirement planning, funding the child's education and risk management, current investments, equity securities, corporate bonds. She's interested in IRAs, 401ks, annuities, insurance policies, and estate planning. All right, she just so happens to be interested in everything we covered in this lesson. It's almost as if we planned this out. All right, getting into the first task, we want to compare qualified retirement plans. So Jane's considering a traditional IRA, Roth IRA, and her employer's 401k plan. Now, let me just say in a perfect world, let's say she's making enough money and she has enough disposable income to put into both maxing out her 401k and the IRAs. Sure, would that be advantageous? Sure, definitely. But obviously not everyone has all that disposable income. Maybe she does not qualify depending on the annual income threshold. That's something I would definitely recommend you know. We have that on our memorization guide. Now, $100,000 is below the amount, the threshold. So she can contribute to a Roth IRA. However, if she made 200k, however, that could preclude her from contributing to a Roth IRA. So make sure you know that as well. And again, the disposable income, right? She makes 100k, but she's got a kid, presumably dealing with a child's education. So if she does have a kid, she probably has a lot less income to actually

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Individual compliance, tax & financial planning

Module: 2 Concepts, 23 Videos

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Impact of Equity Compensation Awards on Taxable Income

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Alternative Minimum Taxable Income

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Imputed Interest and Foreign-Earned Income