CH 14 and 15 SIE

current transaction reports are used for amounts that exceed _____

$10,000

An 75-year old individual has contributed $40,000 to a qualified plan that currently has a value of $100,000. If she decides to take a lump-sum distribution of the total value, she is taxed on: A None of the $100,000 B $40,000 C $60,000 D $100,000

$100,000 Since contributions to a qualified plan are made in pre-tax dollars, this results in a zero cost basis (i.e., none of the funds have been taxed). As a result, when distributions are made, the entire amount is taxable as ordinary income.

If you are age 50 and older, you are allowed to contribute an additional _______ to your IRA

$1000

A person may contribute _______ annually to an IRA

$6000 or 100% of earned income (whichever is less)

early withdrawal penalty before the age of 59 1/2 (traditional IRA)

10%

how long are municipal complaints kept on record?

4 yrs

RMD tax penalty (Traditional IRA)

50% after age 72

how long are new account forms and POAs kept on record?

6 yrs

how long are records of original entry (blotters) kept on record?

6 yrs

Telephone solicitation time frame

8:00am-9:00pm

Which of the following is a characteristic of a Roth IRA? A Contributions are made in after-tax dollars. B Contributions are permitted regardless of an individual's gross income. C Distributions from the plan are taxed as long-term capital gains. D Qualified distributions are taxed as ordinary income.

A Contributions are made in after-tax dollars.

A broker-dealer's anti-money laundering (AML) compliance program must be approved: A In writing by a member of senior management B By FINRA and a member of senior management of the broker-dealer C By the SEC and the head of compliance for the broker-dealer D In writing by both the CEO and the CFO

A In writing by a member of senior management

A mother wants to gift money to her son. If she doesn't want the son to be able to use the money for living expenses, which of the following accounts is the most beneficial? A Trust account B 529 plan C Joint Account D Managed fee based account

A Trust account Trust accounts are set up to pass money and property to another person and, since they can be set up with restrictions on withdrawals, this is the best option for the mother.

Discretionary accounts require: A Written authorization from the customer B Oral authorization from the customer C Written authorization from the client for each trade the registered representative executes D The registered representative to send the client a letter detailing the proposed transaction

A Written authorization from the customer

Which investment is NOT eligible for a 403(b) plan? A Mutual fund B Limited partnership C Variable annuity D Fixed annuity

B Limited partnership Investments in a 403(b) plan are limited to mutual funds, as well as variable and fixed annuities.

Premature withdrawals of earnings from an IRA that qualify for an exception are subject to: A Neither a 10% tax penalty on the amount withdrawn nor ordinary income taxes on that same amount B Ordinary income taxes on the amount withdrawn, but not a 10% tax penalty on that same amount C A 10% tax penalty on the amount withdrawn, but not ordinary income taxes on that same amount D A 10% tax penalty plus ordinary income taxes on the amount withdrawn

B Ordinary income taxes on the amount withdrawn, but not a 10% tax penalty on that same amount

If a customer wishes to open an account to trade options, the account must be approved: A 15 days prior to the time an initial order is accepted B Prior to the time an initial order is accepted C No later than the time the confirmation is mailed to the customer for his initial transaction D Within 15 days of the acceptance of the initial order

B Prior to the time an initial order is accepted

Broker-dealers are required to send balance sheets to customers every: A Nine months B Six months C Three months D 12 months

B Six months

primary US anti-money laundering law

Bank Secrecy Act

In which of the following situations must a broker-dealer file a Currency Transaction Report (CTR)? A A customer deposits bearer bonds with a face value of $100,000 B A customer purchases stock with a $20,000 personal check C A customer opens an account with $11,000 in cash D A customer opens an account with a credit card debit check valued at $20,000

C A customer opens an account with $11,000 in cash

A confirmation must be sent to a customer no later than: A The trade date B The business day after the settlement date C The completion of the trade D Two business days after the settlement date

C The completion of the trade

A husband and wife have a joint account with right of survivorship. If one of the parties places an order, the RR: A Should contact the other party prior to placing the order B May accept the order only if the other party has granted trading authorization C May accept the order D Must have the order approved by a principal prior to execution

C may accept the order

A 55-year-old investor has earned $55,000 in pension income and $1,500 from a part-time job this year. How much can she contribute to her IRA? A $6,000 B $7,000 C $0 D $1,500

D 1500

Which of the following statements are TRUE regarding a margin account? A A customer cannot lose more than the amount deposited. B A customer can choose which securities will be sold in the event of a margin call. C The firm must contact the customer when it sells securities from the account. D An extension of time cannot be granted to meet a maintenance call.

D An extension of time cannot be granted to meet a maintenance call.

A broker-dealer's stock is publicly traded. In order to purchase this stock in a customer's discretionary account, the registered representative: A Must wait 30 days B Can make the purchase if the investment is suitable for the customer C Can make the purchase if it's approved by a principal of the broker-dealer D Can make the purchase if the customer's written approval is received

D Can make the purchase if the customer's written approval is received

What feature is shared by both Roth IRA and Roth 401(k) plans? A Contributions to both are deductible (made pre-tax). B Both accounts allow for an unlimited contribution. C Neither account has early distribution penalties. D Qualified distributions from both are excluded from federal income tax.

D Qualified distributions from both are excluded from federal income tax.

Which of the following statements is TRUE concerning member firms' suitability requirements for institutional investors? A Institutional investors are exempt from SRO suitability requirements B The SRO suitability requirements apply unless the account is defined as a Qualified Institutional Buyer C The suitability requirements are more stringent than those of retail accounts D The suitability requirements are less stringent than those of retail accounts

D The suitability requirements are less stringent than those of retail accounts

rule that requires banks and financial institutions to create and implement written identity theft prevention program

FTC flag rule

how long are corporate or partnership documents kept on record

Lifetime

sar reports are used for

amounts exceeding $5,000 when firm suspects suspicious activity

member firm sends to 25 or fewer retail investors within 30 day calendar period

correspondence

covers officers and employees by providing protection against forgery, securities loss, counterfeit

fidelity bonds

the client borrows funds from BD to purchase share

long position

how often are free credit balances advised on

quarterly

member firm sends to 25 or more retail investors within 30 day calendar period

retail communications

which type of IRA has no withdrawal requirement?

roth

client borrows shares from BD to execute short sale

short position

Traditional IRAs accumulate on a ______ basis until withdrawn

tax-deferred

what type of IRA can contributions be deductible?

traditional

which type of IRA are withdrawals subject to tax?

traditional