Unit 3
The Centerboro School District is initiating a retirement plan for its teachers and staff. Those who participate will make pretax contributions directly from their salaries, which will be invested according to a trust agreement. What type of retirement plan is this?
403(b) plan
Double Entry Accountancy, an accounting partnership, has selected new managing partners. The existing authorized parties for the account will need to be removed and the new managing partners added as authorized to manage the account. What does the firm need to provide to accomplish this change?
A resolution of the partners removing the prior authorized parties and appointing the new authorized parties
Dale would like for his daughter, DeAnna, to manage his brokerage account. He would like her to be able to place trades and request funds be transferred to other accounts or have checks sent to him. Which of the following would be best for Dale?
Appoint DeAnna as FPOA for the account.
Which of the following entities pays taxes?
C Corporation
Which of the following retirement plans would be advantageous for an older employee whose skills are essential to the operation of a corporation's business?
Deferred compensation plan Deferred compensation plans allow employers to discriminate in favor of key employees, and employers may fund heavily in favor of a specific employee.
Regulations regarding how contributions are made to tax-qualified plans relate to which of the following ERISA requirements?
Funding
Which of the following statements regarding qualified pension plans are true? They must not discriminate. They must have a vesting schedule. They must be in writing or voice recorded. Every month the employer must update the current status of all accounts.
I and II
Broker-dealers who reserve the right to disclose nonpublic private information about their customers to unaffiliated third parties must provide notice to customers at the time of the account opening. provide notice to customers each time a transaction occurs within the account. provide reasonable means for customers to opt out of such disclosures. require that customers wishing to opt out send a written request with signature witnessed by a notary.
I and III
Peyton has recently married and would like to add their spouse as a joint tenant to their brokerage account (currently in individual registration). What documents will your firm need to fulfill this request? Letter of Authorization (LOA) from Peyton adding their spouse to the account Letter of Authorization from the new spouse requesting they be added to the account New account form completed by Peyton's spouse New account form completed by Peyton
I and III
Which of the following concerning Section 529 plans are true? Qualified withdrawals are exempt from federal income tax. Contributions are tax qualified. Some states will tax the withdrawals as income. Withdrawals may be used for any expenses incurred by a student.
I and III
Which of the following could start a tax-sheltered annuity? A public school A county government A small law practice A research foundation
I and IV
If a registered representative of a FINRA member firm wants to open an account with another member firm, which of the following statements are true? The account may not be opened under any circumstances because the registered representative has access to privileged information. The account may be opened, but the registered representative may not engage in securities transactions that he could do through his own firm. The member firm opening the account must send duplicate confirmations to the employing member firm if requested to do so. The member firm opening the account must have written authorization from the employing member firm.
III and IV
The best account for a married couple who both need access to the account and want to maintain control if one of them should pass away would be which of these?
Joint tenants with rights of survivorship (JTWROS)
Assets may be transferred from one account to a different account within the same firm by use of which of these?
Journal letter
Which of the following would not be an acceptable method for a customer opting-out of information sharing?
Requesting a form that must be properly completed and returned
Which of the following is considered nonpublic personal information under Regulation S-P?
Social Security number
Bailey wants to open an account for their unincorporated business, Bailey's Best Burgers. Bailey is the sole owner of the restaurant. Which of the following registration types would be best for Bailey's Best Burgers?
Sole proprietor
Adrian and Alex are tenants in a joint account. If Adrian passes away their share of the account will be distributed through Adrian's estate. What type of account is this?
Tenants-in-common
The provisions of Regulation S-P are derived from which of these federal legislative acts?
The Gramm-Leach-Bliley Act
If Jorge, age 49, earns $400,000 per year in his salaried position and he participates in his company's 401(k) plan, how much may he contribute to his traditional IRA?
The current maximum contribution Even though Jorge participates in his company's 401(k) plan, he is still eligible to participate in a traditional IRA. However, because of his income level, he may not deduct the contributions on his tax return.
Which of the following is an example of a discretionary trade?
The customer requests a representative buy 300 shares of a good tech company.
A transfer of assets from an account at one firm to an account at a different firm begins with the completion of which of the following forms?
Transfer Initiation Form (TIF)
Which of the following would be considered acceptable to verify a customer's identity when opening an account?
U.S. Department of Defense ID
A customer identification program (CIP) will include provisions for responding to circumstances when a broker-dealer cannot form a reasonable belief that it knows the identity of a customer. Which of the following procedures are not required under the CIP rules?
When to report suspicious activity to the FBI
One of your clients wants to set aside some money for her ne'er-do-well nephew, who just turned 30. She does not wish his numerous creditors to have access to the money until after she dies, but she wants him to have easy access to the money at that time. You recommend that she open
a TOD registration on an account in her name.
The child of one of your recently deceased clients comes to your office with several properly signed stock certificates inherited from a parent. The child does not have an account and wishes to sell the securities. An account is opened for the purpose of the liquidation. Regulation S-P would refer to this child as
a consumer.
Qualified annuity plans offered under Section 403(b) of the Internal Revenue Code, referred to as tax-sheltered annuities (TSAs), are not available to
a student at a nonprofit college.
When a member firm opens an account for a registered representative of another member, the employer-member must provide written authorization
before opening the account.
Minimum distributions from a traditional IRA must begin
by April 1, the year after the owner turns 72.
All of the following statements about joint tenants with rights of survivorship are true except
checks can be made out to either party.
In order to open an account a broker-dealer must collect all of the following information except
customer's job history.
A nonqualified deferred compensation plan
does not guarantee that the employer will fulfill its obligation. Nonqualified deferred compensation plans are agreements between an employer and an employee in which the employee agrees to defer receipt of part of their salary. Nonqualified deferred compensation plans do not require IRS approval and may discriminate (need not be offered to all employees). In fact, they are generally offered only to officers and other high-ranking executives. In the event of a business failure, there is no guarantee that deferred amounts will be paid.
Under Regulation S-P, nonpublic personal information would not include a customer's
home address.
Regulation S-P requires that disclosures must include all of the following except
how such information sharing provides a benefit to the customer.
An agent of a broker-dealer must obtain all of the following when opening a customer account except
occupational history.
Under FINRA rules, the carrying member, after receiving account transfer instructions from the receiving member, must validate the positions in the account within how many business days of receipt?
one day
All of the following actions are violations of the Conduct Rules except
opening a cash account for a customer without the customer's signature on the new account form.
Regulation S-P of the Gramm-Leach-Bliley Act defines information that needs to be protected as information that is
personally identifiable financial information.
If a broker-dealer wants to disclose nonpublic private information about their customers to unaffiliated third parties they must first
provide notice to customers at the time of the account opening and provide reasonable means for customers to opt out of such disclosures.
When determining whether a registered representative is churning an account, each of the following is taken into consideration except
rating of securities traded.
Under the funding rules of the Employee Retirement Income Security Act (ERISA) funds deposited into an ERISA covered plan must be
segregated from other corporate assets in a trust.
A customer will be leaving the country and asks his representative to watch his account. If his positions begin to decline in value, the registered representative should
talk to his manager.
A transfer on death (TOD) designation may be made for all of the following account except
tenants in common
A new client turns in the new account form. While reviewing the information on the form, the registered representative handling the account notices that the space for listing the Social Security number is blank. Under the provisions of the USA PATRIOT Act of 2001,
the account can be opened if the client has already applied for a number.
A qualified profit-sharing plan offered by a corporation to its employees has all of the following features except
the amount of the contribution is tax deductible to the employee.
All of the following statements relating to a deferred compensation plan are correct except
the covered employee must receive reports on the status of the plan no less frequently than annually.
A durable full power of attorney (FPOA) continues until
the grantor dies.
A corporation wants to open a brokerage account. A customer identification program would require all of the following information except
the owner's name.
