Series 65 - Unit 24

One member of a married couple in their 30s earns an annual salary of $45,000 while the other earns $2,000 annual from a home-based business. If they file a joint tax return, their maximum IRA contribution for the year is

$12,000

The maximum amount that can be invested in a Coverdell ESA in one year is

$2,000 per child

Who of the following will NOT incur a penalty on an IRA withdrawal?

A man who has just become totally disabled

Which of the following would best describe a prudent investor?

A trustee who invests with reasonable care, skill, and caution

Which of the following may participate in a Keogh plan? I. Self-employed doctor II. Analyst who makes money giving speeches outside regular working hours III. Individual with a full-time job who also has income from freelancing IV. Corporate executive who receives $5,000 in stock options from his corporation

I, II, and III

To comply with the safe harbor requirements of Section 404(c) of ERISA, the trustee of a 401(k) plan must I. offer plan participants at least 10 different investment alternatives II. allow plan participants to exercise control over their investments III. allow plan participants to change their investment options no less frequently than monthly IV. provide plan participants with information relating to the risks and performance of each investment alternative offered

II and IV

While in your office, you see that your firm is going to be holding a training session on municipal fund securities. You wish to attend because you are interested in being able to speak intelligently to your clients about

Section 529 plans

One of you clients is a successful professional couple with earnings in excess of $500,000 per year. They are interested in providing a funding source for postsecondary education for their grandchildren. Which would be appropriate to discuss with them?

The Section 529 Plan

Which of the following objectives would NOT be met by an employer's use of a non qualified retirement plan?

The employee desires current tax savings.

Susan participates in a Section 401(k) plan at work that includes loan provisions. Susan has recently enrolled in college and has inquired about the possible consequences of borrowing from the plan to help pay for her education. As her financial planner, what is your advice to her?

The loan must be repayable within 5 years at a reasonable rate of interest.

A basic difference between a Section 457 plan established on behalf of a governmental entity and one established by a private tax-exempt organization is that

a governmental plan must hold its assets in trust or custodial accounts for the benefit of individual participants

SEP IRAs

are used primarily by small businesses

One of the reasons you might suggest that a client with an 8-year old child open a UTM account rather than an UGMA is that the UTMA offers

more investment flexibility

If a customer would like to open a custodial UGMA or UTMA account for his nephew, a minor, the uncle can

open the account and name himself custodian

Grandma Abigail died at age 82 with a traditional IRA valued at $100,000. Her daughter Betsy, 53 years old, was the sole beneficiary. Betsy's choices would include

taking distributions spread out over a 5-year period

Among the eligibility requirements to open a health savings account is

the individual must have a HDHP

Among the requirements for accumulated earnings in a Roth IRA to be withdrawn free of tax is

the initial deposit to a Roth IRA was made at least 5 years ago