Unit 18 S65 Review
C) He may contribute 100% of earned income or the maximum allowable IRA limit, whichever is less.
A 45-year-old employment counselor has a Keogh plan for himself and 3 full-time employees who have been working for him for the past 4 years. If he earns $150,000 this year and contributes the maximum amount allowed to his Keogh plan, how much may he invest in an IRA? A) He may have an IRA but may not make a contribution for this year. B) He may not have an IRA. C) He may contribute 100% of earned income or the maximum allowable IRA limit, whichever is less. D) He may invest any amount up to 100% of his earned income.
A) contributions through elective deferral of his salary to the employer's 401(k) plan, at least to the employer's matching level
A young customer who is a novice investor wishes to begin an investment program. He is eligible for his employer's 401(k) plan, to which the employer makes matching contributions, but he does not participate in the plan. Your advice to the customer should be to begin A) contributions through elective deferral of his salary to the employer's 401(k) plan, at least to the employer's matching level B) by making regular contributions to a growth mutual fund C) by making regular contributions to an income mutual fund D) by taking positions in individual stocks
A) the employer may make unlimited contributions, which generate unlimited tax deductions for the business.
All of the following are advantages of a 401(k) plan except A) the employer may make unlimited contributions, which generate unlimited tax deductions for the business. B) employees and the business may reduce current taxes. C) the owner of the business may participate in the plan. D) tax deferral on the plan earnings is advantageous to employees.
D) contributions are made with pretax dollars at the federal level.
All of the following statements regarding 529 plans are true except A) the beneficiary of a 529 plan may also be the beneficiary of a Coverdell Education Savings Account. B) anyone can make a contribution on behalf of a beneficiary. C) earnings accumulate tax free if the money is used for qualified educational purposes. D) contributions are made with pretax dollars at the federal level.
D) employer contributions to the plan are not subject to current taxation to the employee.
Each of the following are advantages offered by a nonqualified deferred compensation plan that are not found in a qualified plan except A) they are an attractive benefit to the employer because participation requirements and nondiscrimination restrictions do not apply. B) deferred compensation plans are not subject to most of the requirements of the Employee Retirement Income and Security Act of 1974 (ERISA). C) they are an attractive benefit for highly compensated employees because they're free from the contribution limits. D) employer contributions to the plan are not subject to current taxation to the employee.
D) Money purchase pension plan
For which of the following employer-sponsored qualified plans is it mandatory that annual contributions be made? A) Deferred compensation plan B) Defined benefit plan C) Profit-sharing plan D) Money purchase pension plan
B) a 403(b) and a 457 plan.
Mary teaches physics at the local high school and makes about $70,000 per year. She could maximize her annual retirement savings by participating in A) an employer-funded 401(k) plan. B) a 403(b) and a 457 plan. C) a 403(b) plan. D) a 403(b) plan and an IRA.
D) Section 529 plans
One of your clients has made plans to get an advanced degree by enrolling in the local community college in three years. At the same time, her child expects to be entering veterinary school. What would you recommend as the most appropriate tool to accumulate funds for both of them? A) Coverdell ESAs B) Variable annuities C) UTMA accounts D) Section 529 plans
C) Roll the money into a traditional self-directed IRA
Tammy Jones is retiring from her company next month on her 62nd birthday. Her 401(k) has $300,000 and offers her 4 different mutual funds. After calculating what she will receive from Social Security, she concludes that she will need an additional $500 a month to retain her current lifestyle. Which of the following would be the most appropriate recommendation? A) Take a lump-sum distribution of the entire $300,000 B) Roll the money into a mutual fund withdrawal plan C) Roll the money into a traditional self-directed IRA D) Leave the money in her current 401(k) account
D) not permitted to use those funds to acquire company assets in an amount beyond the allowable limits.
Those individuals who are considered parties in interest due to handling the assets of a corporate retirement plans are A) not considered to have a fiduciary responsibility. B) encouraged to use plan funds to assist the employer when there is a cash flow crisis. C) able to sell personal securities to the plan if that will benefit plan participants. D) not permitted to use those funds to acquire company assets in an amount beyond the allowable limits.
D) An UTMA account
Which of the following assets will have the greatest effect on minimizing financial assistance when an individual is applying to college and using the FAFSA application? A) A prepaid tuition plan B) A Roth IRA C) A Coverdell ESA D) An UTMA account
D) II and III
Which of the following circumstances must be met for a fiduciary to trade options in a trust account? Special circumstances determined by the broker-dealer The trust agreement states the trustee has the power to trade options The trust's investment objectives are determined to be compatible with options trading Only covered options may be traded by a fiduciary A) I and IV B) II and IV C) I and III D) II and III
A) II and III
Which of the following concerning a money purchase pension plan are true? All employees must contribute to the plan. Voluntary employee contributions are optional. Employer contributions are required. Employer contributions are optional. A) II and III B) I and IV C) I and III D) II and IV
A) a 403(b).
A 40-year-old teacher in the local public school system would find her retirement needs best served by contributing to A) a 403(b). B) a traditional IRA. C) a Roth IRA. D) a 401(k).
C) works of art
All of the following investments are eligible for a traditional IRA except A) covered call writing B) growth-oriented securities C) works of art D) bank CDs
A) II and III
In the construction of a qualified retirement plan portfolio, which of the following investment vehicles would be considered generally inappropriate? A guaranteed investment contract (GIC) A municipal bond fund A leveraged real estate limited partnership A corporate bond rated A or higher A) II and III B) I and II C) III and IV D) I and IV
C) municipal bonds.
Prohibited investments in an IRA would include all of the following except A) stamps. B) gems. C) municipal bonds. D) artwork.
B) a federal law regulating many aspects of private retirement plans
The Employment Retirement Income Security Act of 1974 (ERISA) is A) a federal law establishing the Social Security system B) a federal law regulating many aspects of private retirement plans C) a state law regulating many aspects of private retirement plans D) a state law establishing a pension system for state employees
C) $1,000 from Pam's parents and $1,000 from Jim's parents into separate ESAs
Two years after their wedding, Pam and Jim became the proud parents of child. Both grandparents want to help ensure educational funds for their new grandchild by using the Coverdell ESA. Assuming they are within the earnings limitations, which of the following would be permitted? A) $2,000 from Pam's parents and $2,000 from Jim's parents into a single ESA B) $2,000 from Pam's parents and $2,000 from Jim's parents into separate ESAs C) $1,000 from Pam's parents and $1,000 from Jim's parents into separate ESAs D) $2,000 from Pam's mother, $2,000 from Pam's father, $2,000 from Jim's mother, and $2,000 from Jim's father
B) The current maximum per child
What is the total amount that may be invested in a Coverdell Education Savings Account in 1 year? A) The current maximum per family member B) The current maximum per child C) The current maximum per couple D) The current maximum per parent
C) Section 529 plan
Which of the following is considered to be a security? A) Section 457 plan B) Section 403(b) plan C) Section 529 plan D) Coverdell ESA
B) A SIMPLE plan
Which of the following is not an example of a nonqualified retirement plan? A) A payroll deduction plan B) A SIMPLE plan C) A deferred compensation plan D) A SERP
C) 60 days
A customer who is changing jobs has how many days to roll over a lump-sum distribution from a qualified pension plan into an IRA? A) 90 days B) 15 days C) 60 days D) 30 days
C) I, II, III, and IV
A prospective client has been interviewing a number of investment advisers and wishes to see your firm's investment policy statement. Your IPS would probably include which of the following headings? Investment objectives Investment philosophy Investment selection criteria Monitoring procedures A) II and IV B) I, III, and IV C) I, II, III, and IV D) I and II
D) $85,000
A widower wants to fund a Section 529 plan for his daughter. What is the maximum amount he may initially contribute in 2023 without having to pay gift taxes? A) $160,000 B) $15,000 C) An unlimited amount because a gift occurs only when he irrevocably changes the beneficiary D) $85,000
C) eligibility is affected by the income level of the contributor.
All of the following statements regarding 529 plans are true except A) states impose very high overall contribution limits. B) contributions to a 529 plan may be subject to gift taxation. C) eligibility is affected by the income level of the contributor. D) the assets in the account are controlled by the account owner, not the child.
B) a defined benefit plan
An employer-sponsored retirement plan that pays a specific benefit to participants at their normal retirement age is A) a section 401(k) plan B) a defined benefit plan C) a defined contribution plan D) a supplemental employee retirement plan
C) Roth IRA
Assuming all withdrawals are equal, which of the following would subject a 60-year-old investor to the least amount of tax? A) Nonqualified variable annuity B) 403(b) plan C) Roth IRA D) Traditional IRA
B) a 401(k) and a 403(b).
For purposes of the maximum allowable annual contribution, an individual would have to aggregate contributions made to A) a 401(k) and a Roth IRA. B) a 401(k) and a 403(b). C) a 403(b) and a 457. D) a 401(k) and a 457.
D) identical amounts of contributions are allowed.
IRAs and Keogh plans are similar in the following ways except A) deferral of taxes. B) distributions without penalty can begin as early as age 59½ C) there is a 25% tax penalty for insufficient distributions. D) identical amounts of contributions are allowed.
B) open the account and name himself custodian
If a customer would like to open a custodial UGMA or UTMA account for his nephew, a minor, the uncle can A) open the account provided the proper trust arrangements are filed first B) open the account and name himself custodian C) open the account, but he needs a legal document evidencing the nephew's parents' prior approval of the account D) be custodian for the account only if he is also the minor's legal guardian
C) age 21, with at least 1 year of service.
If an employer installs a Keogh plan, it must include all full-time employees A) with at least 3 years of service, regardless of age. B) age 25 or older. C) age 21, with at least 1 year of service. D) with at least 1 year of service.
D) shifts the responsibility for account performance to the employee.
If the administrator of a corporate 401(k) plan ensures that a wide variety of investment alternatives are available to employees along with the ability for the employees to monitor their accounts and make frequent changes as needed, ERISA A) removes the requirement for top-heavy testing. B) might find the administrator to be shirking his fiduciary responsibility. C) removes the requirement for the plan to provide employees with quarterly reports. D) shifts the responsibility for account performance to the employee.
A) The entire amount rolled over must be declared as income.
Jill's bank, where she has her traditional deductible contributory IRA, is recommending that she roll over her IRA into a Roth IRA to benefit from the tax-free status of the withdrawals when she retires. (Jill is now 32 years old.) Which of the following is a consequence if Jill follows the bank's recommendations? A) The entire amount rolled over must be declared as income. B) Rolling over a traditional IRA to a Roth IRA will negate the tax-free status of future withdrawals. C) The amount attributable to growth must be declared as income. D) No tax will occur, provided the rollover is completed within 60 days.
A) a federal law regulating many aspects of private retirement plans
The Employment Retirement Income Security Act of 1974 (ERISA) is A) a federal law regulating many aspects of private retirement plans B) a state law establishing a pension system for state employees C) a federal law establishing the Social Security system D) a state law regulating many aspects of private retirement plans
D) the actual sum an employee will receive at retirement is unknown.
The main disadvantage of a contributory defined contribution pension plan is that A) the employer contributed toward the retirement planning of the employee. B) at retirement, the client might want to use the retirement fund to generate income in retirement, possibly by purchasing an annuity. C) the employees can choose the amount they wish to invest. D) the actual sum an employee will receive at retirement is unknown.
D) once every 3 months
Under ERISA Section 404(c), plan participants must be able to reallocate plan assets A) once every week B) daily C) annually D) once every 3 months
B) deferred compensation plans
Under ERISA, all of the following retirement plans must set standards for vesting, eligibility, and funding except A) Keogh plans B) deferred compensation plans C) corporate pension plans D) profit-sharing plans
D) I, II, III, and IV
Which of the following investment activities are acceptable for a fiduciary acting under the prudent expert rule? Purchasing AAA-rated debentures Purchasing a growth mutual fund Purchasing new issues of a AAA-rated issuer Writing covered calls on dividend-paying stocks A) I and II B) II and IV C) II and III D) I, II, III, and IV
A) Municipal bonds
Which of the following investments would be permitted in a client's IRA? A) Municipal bonds B) Term life insurance C) Variable life insurance D) Art
A) I, II, and III
Which of the following is (are) true regarding qualified pension plans? They must not discriminate. They must have a vesting schedule. They must be in writing. Every month the employer must update the current status of all accounts. A) I, II, and III B) I and III C) III only D) I, II, III, and IV
C) Real estate
Which of the following may be purchased in an UTMA but not an UGMA? A) Mutual funds B) Individual stocks C) Real estate D) Bank CDs
A) II and IV
Which of the following qualified retirement plans offer tax advantages to both the employer and the employee? Individual retirement arrangements (IRAs) 401(k) plans Deferred compensation plans Defined benefit plans A) II and IV B) I and III C) II and III D) I and IV
B) In a defined benefit plan, the client can have some reasonable certainty about the amount of income that will be received in retirement.
Which of the following statements is most accurate regarding employer-sponsored retirement plans? A) In a defined benefit plan, the payments provided are related to the contributions made and investment performance achieved. B) In a defined benefit plan, the client can have some reasonable certainty about the amount of income that will be received in retirement. C) In a defined contribution plan, the payments received are related to the number of years of service and the individual's final salary. D) The employee in a defined benefit plan bears the shortfall risk.
C) Child
Who is obligated for the payment of taxes in an UTMA account? A) Custodian B) Parent C) Child D) Donor
C) Child
Who is obligated for the payment of taxes in an UTMA account? A) Donor B) Parent C) Child D) Custodian
D) Qualified variable annuity
Withdrawals during retirement from which of the following accounts would most likely be subject to the greatest amount of taxation? A) Nondeductible traditional IRA B) Roth IRA C) Nonqualified variable annuity D) Qualified variable annuity
D) 10%.
Your client, who has not yet attained the age of 59½, wants to take a withdrawal from his traditional IRA. Since the client is not disabled and does not meet any other qualifying reason allowing for an early withdrawal, you explain that the amount taken will be subject to a penalty of A) 50%. B) 6%. C) 15%. D) 10%.
B) the employer can take a tax deduction at the time the contribution is made to the plan.
All of these are reasons a corporation might choose to establish a nonqualified plan rather than a qualified plan except A) the corporation can exclude rank-and-file employees from a nonqualified plan. B) the employer can take a tax deduction at the time the contribution is made to the plan. C) a nonqualified plan typically has lower administrative costs. D) a nonqualified plan has more design flexibility than a qualified plan.
B) an executive of a corporation who receives $5,000 in stock options from his company.
Each of the following individuals is eligible to participate in a Keogh plan except A) a securities analyst employed by a major research organization who makes $2,000 giving lectures in his spare time. B) an executive of a corporation who receives $5,000 in stock options from his company. C) a self-employed doctor in private practice. D) an engineer employed by a corporation who earns $5,000 making public speeches in her spare time.
C) refuse to allow this to happen because it would be a violation of your fiduciary responsibility
GEMCO Manufacturing Co. has appointed the company's CFO as the trustee for their employee retirement plan. You are an IAR and you advise a substantial portion of the plan's assets. You are contacted by the CFO requesting a short-term loan from the plan assets for which he will pay the plan prime + 2%. Your best course of action would be to A) permit the loan because the CFO is the plan trustee B) permit the loan once you have been satisfied that there is adequate collateralization in place C) refuse to allow this to happen because it would be a violation of your fiduciary responsibility D) refuse to allow this to happen because the plan assets will suffer
A) she is not eligible to participate.
If your customer works as a nurse in a public school and wants to know more about participating in the school's 403(b) plan, it would be accurate to make each of the following statements except A) she is not eligible to participate. B) mutual funds and annuities are available investment vehicles. C) distributions before age 59½are typically subject to penalty. D) contributions are made with pretax dollars.
D) final average salary.
In general, in a defined benefit plan, the pension to be received upon retirement is based on the number of years of service and the individual's A) life expectancy. B) agreed salary. C) current salary. D) final average salary.
A) under a QDRO.
In many cases, the exceptions from the early-distribution tax penalty of 10% are the same for both IRAs and qualified plans. However, a specific exception granted to those with qualified plans that is not available to IRA owners is distributions A) under a QDRO. B) used for higher education expenses. C) for certain medical expenses. D) for a first-time home purchase.
C) Jerome should use the 10-year cash-out option.
Martha passed away in November 2023 at the age of 87. Among the assets in her estate was an IRA with a value of $150,000. Martha's son, Jerome, a successful 52-year-old surgeon and a client of yours, was named as the beneficiary of the IRA. From a tax standpoint, which of the following options would you recommend to Jerome? A) Jerome should use the five-year cash-out option. B) Jerome should take the cash now and use a Section 1035 exchange into an annuity. C) Jerome should use the 10-year cash-out option. D) Jerome should take the cash now and use the money to fund a new IRA.
A) the daughter getting the home and furnishings, the son receiving the brokerage account, and the sister getting the IRA.
One of your customers passed away recently. The customer had an IRA with you and had his sister listed as the beneficiary. Other assets included the home and furnishings and a brokerage account at another firm. The titling on that brokerage account was the customer and his son, JTWROS. The customer's will specified that 100% of his assets should pass to his daughter. Based on this information, the estate settlement will have A) the daughter getting the home and furnishings, the son receiving the brokerage account, and the sister getting the IRA. B) the daughter receiving everything as stated in the will. C) the daughter getting the home and furnishings and the brokerage account, with the sister receiving the IRA. D) the daughter getting the home and furnishings and the IRA, with the son receiving the brokerage account.
A) a 403(b) plan
The type of tax-favored retirement plan that is available to nonprofit entities such as schools and hospitals and that is sometimes called a tax-sheltered annuity is A) a 403(b) plan B) a 401(k) plan C) a simplified employee pension (SEP) D) a SIMPLE retirement plan
D) I and III
To comply with the safe harbor requirements of Section 404(c) of ERISA, the trustee of a 401(k) plan must offer plan participants at least three different investment alternatives ensure that plan participants are insulated from control over their portfolios allow plan participants to change their investment options no less frequently than quarterly allow plan participants to purchase U.S. Treasury securities A) II and IV B) II and III C) I and IV D) I and III
B) When the distribution is paid in equal annual amounts over the owner's life
Under which of the following circumstances would a premature distribution from a traditional IRA be exempt from the premature distribution penalty? A) When the account is fully funded with nondeductible contributions B) When the distribution is paid in equal annual amounts over the owner's life C) A distribution taken to satisfy the terms of a court-ordered property settlement D) A distribution taken at age 55 if the owner is retired
B) the corporation is obligated to make annual contributions at the rate stated in the plan.
When a corporation establishes a qualified money purchase plan, A) the corporation can adjust the contribution rate based on company profits. B) the corporation is obligated to make annual contributions at the rate stated in the plan. C) the employee is obligated to make annual contributions at the rate stated in the plan. D) discrimination in favor of lower-compensated employees is encouraged.
C) Health savings account (HSA)
Which of the following offers the benefit of tax-deductible contributions? A) Roth IRA B) Coverdell Education Savings Account (ESA) C) Health savings account (HSA) D) Payroll deduction plan
B) 457(b)
Which of the following retirement plans would be appropriate for a highly compensated government employee? A) 401(k) B) 457(b) C) 403(b) D) IRA
C) Qualifying distributions are received free of income tax if a holding period and age requirement is met.
Which of the following statements describes an advantage of a Roth IRA over a traditional IRA? A) The AGI limits for contributions are the same as those for traditional deductible IRA contributions. B) There are no annual contribution limits once an individual attains age 59½. C) Qualifying distributions are received free of income tax if a holding period and age requirement is met. D) The required minimum distribution date rules do not apply if the distribution is made in the form of an annuity.
B) employees who leave the company prior to retirement would not receive benefits
Among the reasons why a corporation might choose to utilize a deferred compensation plan for retirement planning would be A) current tax savings on money contributed to fund the plan B) employees who leave the company prior to retirement would not receive benefits C) the plans are nondiscriminatory D) compliance with ERISA
B) Traditional IRA
Which of the following does not benefit both the employee and the employer? A) SEP-IRA B) Traditional IRA C) Defined benefit plan D) SERP
c) FSA
Which of the following has a use it or lose it provision? A) HSA B) IRA C) FSA D) ESA
D) A single person adopts a child and withdraws $5,000 from their IRA to pay the adoption expenses.
Which of the following is an allowable early withdrawal from a traditional IRA without a tax penalty? A) A single parent withdraws funds from her IRA to pay for the education of a nephew. B) A single parent supplements a home equity loan with funds from her IRA to pay for a second home. C) A person withdraws funds from his IRA to pay for elective cosmetic surgery. D) A single person adopts a child and withdraws $5,000 from their IRA to pay the adoption expenses.
C) Distribution of up to $10,000 made to purchase a principal residence
An individual has a substantial vested interest in his 401(k) plan at work. Which of the following is not an exception to the premature distribution penalty tax? A) Distribution made pursuant to a qualified domestic relations order B) Distribution because of an employee's death or disability C) Distribution of up to $10,000 made to purchase a principal residence D) Distribution to pay certain medical expenses
B) is disabled
If an individual makes a withdrawal from her IRA at age 52, she pays no penalty tax if she A) used the funds for her nephew's college tuition B) is disabled C) has retired D) had no earned income that year
A) In order for the withdrawal to be considered qualified, it may be used only for postsecondary education expenses.
Which of the following is not true concerning a Coverdell Education Savings Account (ESA)? A) In order for the withdrawal to be considered qualified, it may be used only for postsecondary education expenses. B) The maximum contribution is $2,000 per beneficiary. C) The beneficiary may be the contributor's child or grandchild or the child of a friend of the contributor. D) A beneficiary's unused balance may be rolled over to an ESA account for another child.
D) Shares of an exchange-traded fund tracking the S&P 500 index
Which of the following is the most suitable investment for the IRAs of a young couple with a combined annual income of $80,000? A) Options on large-cap common stock B) Partnership interests in an oil and gas drilling program C) Initial public offerings of small companies D) Shares of an exchange-traded fund tracking the S&P 500 index
D) She may continue to contribute and her contribution will be tax deductible.
You have a client who is not covered under an employer-sponsored retirement plan and has been contributing the maximum to her traditional IRA. She has just informed you that she won $1 million in the lottery, plans to continue working, and would like to continue to contribute to her IRA. Which of the following statements is correct? A) She may continue to contribute, but her contribution will not be tax deductible. B) Her income for the year exceeds the allowable limit for making a contribution. C) She may continue to contribute, but only a portion of her contribution will be tax deductible. D) She may continue to contribute and her contribution will be tax deductible.
D) Selling securities from a minor's custodial account without the custodian's consent but with the beneficial owner's consent
An agent taking which of the following actions would be committing a violation? A) Buying securities in a joint account at the request of one party only B) Selling securities from a corporate account by using limited power of attorney trading authority for the account C) Buying securities in a cash account with the consent of the customer D) Selling securities from a minor's custodial account without the custodian's consent but with the beneficial owner's consent
D) 457 plan
Which of the following employer-sponsored plans allows coverage to discriminate in favor of key employees? A) 403(b) plan B) Defined benefit pension plan C) 401(k) plan D) 457 plan
A) employees who leave the company prior to retirement would not receive benefits
Among the reasons why a corporation might choose to utilize a deferred compensation plan for retirement planning would be A) employees who leave the company prior to retirement would not receive benefits B) compliance with ERISA C) the plans are nondiscriminatory D) current tax savings on money contributed to fund the plan
B) plan participants must be provided with the services of a Certified Financial Planner at least annually to assist them with investment decision making.
To comply with ERISA Section 404(c), a 401(k) plan must satisfy all the following requirements except A) plan participants must have the ability to transfer assets among investment options at least quarterly. B) plan participants must be provided with the services of a Certified Financial Planner at least annually to assist them with investment decision making. C) sufficient information must be provided to plan participants about investment alternatives available under the plan to permit informed decision making. D) plan participants must have access to at least 3 core diversified investment options.
C) Deferred compensation
Which of the following employer-sponsored plans would never be covered by ERISA? A) 403(b) B) Defined benefit pension C) Deferred compensation D) 401(k)
B) Life insurance
Which of the following may not be used to fund an individual retirement account (IRA)? A) Mutual funds B) Life insurance C) Stocks D) Bank accounts
A) Qualified expenses could include tuition for attendance at a foreign university.
Which of the following statements regarding Section 529 plans is correct? A) Qualified expenses could include tuition for attendance at a foreign university. B) Qualified expenses would include all residence costs incurred by a full-time student. C) Funds not used for qualified expenses by age 30 must be distributed or rolled over. D) Residents of some states receive a deduction on their federal income tax returns.
D) with defined benefit plans, the employee bears the investment risk.
All of the following statements regarding qualified corporate retirement plans are true except A) defined contribution plans have the same contribution limits as Keogh plans. B) all corporate pension and profit-sharing plans must be established under a trust agreement. C) all qualified retirement plans are either defined contribution or defined benefit plans. D) with defined benefit plans, the employee bears the investment risk.
C) some states permit transfer of ownership in UTMA accounts to be delayed beyond the age of majority.
In almost all states, the Uniform Gift to Minors Act (UGMA) account has given way to the Uniform Transfers to Minors Act (UTMA) account. Although there are more similarities than differences between them, one of those differences is that A) there is more investment flexibility in the UGMA account. B) the account is in the name of the minor in an UTMA account. C) some states permit transfer of ownership in UTMA accounts to be delayed beyond the age of majority. D) the donor retains control over the investments with an UTMA account.
B) the purchase of securities on margin.
Under the Uniform Gift to Minors Act (UGMA), all of the following are permissible except A) gifts of securities to a minor. B) the purchase of securities on margin. C) gifts of cash to a minor. D) the donor and the custodian being the same person.
B) Hannah, who is 55 years old
Which of the following individuals is clearly eligible to make a catch-up contribution? A) Emily, who is fully vested B) Hannah, who is 55 years old C) Sam, who has completed 15 years of service D) Roger, who has completed 1 year of service
B) Ralph must open the account and name himself as the custodian.
Under the Uniform Gifts to Minors Act, Ralph wants to give some stock to his brother's son, Jose. His nephew's father, Bob, is the legal guardian. If Ralph wants to name himself as custodian, which of the following needs to be done? A) Ralph must receive legal permission to act as custodian. B) Ralph must open the account and name himself as the custodian. C) Ralph must have the permission of the guardian. D) Ralph must file the proper legal documents.
D) 30 days after the designated beneficiary reaches age 30.
Unless the beneficiary is a special needs individual, amounts remaining in a Coverdell ESA must be distributed within A) 30 days after the designated beneficiary reaches age 25. B) 30 days after the designated beneficiary reaches the age of majority in the beneficiary's state. C) 30 days after the designated beneficiary reaches age 18. D) 30 days after the designated beneficiary reaches age 30.
C) The employer is required to contribute on the employee's behalf even if the employee does not contribute to the plan.
Which of the following is a benefit to an employee of a business offering a safe harbor 401(k) using a nonelective formula? A) The employees are guaranteed the ability to consult an investment adviser. B) It guarantees that highly compensated employees do not get more of an employer match than employees who are not highly compensated. C) The employer is required to contribute on the employee's behalf even if the employee does not contribute to the plan. D) The plan is free from the top-heavy testing requirements.
B) The nonqualified plan is permitted to discriminate in favor of highly compensated employees.
Which of the following is the primary advantage to the employer who offers a nonqualified plan when compared to one that offers a qualified plan? A) The qualified plan costs less to administer than the nonqualified plan. B) The nonqualified plan is permitted to discriminate in favor of highly compensated employees. C) The nonqualified plan allows for an immediate employer deduction for contributions. D) The qualified plan is permitted to discriminate in favor of key employees.
D) the identity of the specific securities to be chosen for the portfolio
Although not required by DOL regulations, if a plan administrator prepared a written investment policy statement meeting ERISA requirements, you would expect to find all of the following except A) investment philosophy B) methods to be used for determining how the plan will meet future cash flow needs C) performance measurement parameters D) the identity of the specific securities to be chosen for the portfolio
