Unit 13 - Questions

one spouse of a married couple in their 30s earns an annual salary of $45k, while the other earns $2k annually 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 may be invested in a Coverdell ESA in one year is

$2,000 per child

under Regulation SP, if a BD sends a customer an initial privacy notice that contains an opt-out provision, the firm may not disclose nonpublic, personal information about that customer for how many days from the mailing?

30

a businessman owns a small, incorporated manufacturing company. comfortable with the risks associated with the equity markets, the owner lays out an objective to save for retirement and provides a plan in which employees can contribute to save for retirement as well. which of the following options is the best choice to suitably meet the objective?

401k plan

one of your accounts is a specified adult. if the firm reasonably believes that an attempt at exploiting the person has been made, a temporary hold is permitted on disbursements for

55 business days

ERISA rules and regulations include all of the following: except

ERISA allows the corporation to be the bene of plan benefits for employees before retirement

all of the following statements regarding RMDs from a 401k plan are true except

RMDs taken after age 72 are taxed at a more favorable long-term capital gains rate

a married 75-year old employee, who spouse is 55, works for a manufacturing firm and has $1 million in the firm's 401k plan. what is accurate regarding the RMD from the 401k plan at this point in time?

RMDs will begin after the employee retires

a retirement plan that allows the employee to make pretax contributions (within certain limits), provides for tax deferral of earnings, and is available for employees of public school systems and certain tax-exempt organizations is

a 403b plan

which of the following plans are covered by ERISA?

a defined benefit plan offered by a manufacturing company to employees

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

which of the following will not incur a penalty on an IRA withdrawal?

a man who has just become totally disabled

a FINRA member firm making a bulk transfer of customers' assets would most likely give notification through

a negative response letter

an institutional customer would like to use one BD to handle the administration of the account but would like to use various other BDs to execute trades for certain types of securities. which type of account would meet the customer's needs?

a prime brokerage account

several investors open an account as TIC. for suitability purposes, financial information is required on which of the following investors?

all of the investors

a type of payroll deduction plan that allows employees to purchase the company stock at a discount from the purchase price is called

an employee stock purchase plan

generally speaking, nonqualified retirement plans

are funded with after-tax dollars

an IRA account at a BD must be set up as a

cash account

allowable investments within an IRA include all of the following except

collectibles such as postage stamps

under ERISA, all of the following retirement plans must set standards for vesting, eligibility, and funding except

deferred compensation plans

a customer asks your advice regarding a deferred compensation plan at work. you should state that

deferred compensation plans may be somewhat risky because the employee covered by the plan becomes a general creditor if the business fails

which of the following statements regarding savings incentive match plans for employees (SIMPLEs) is not true?

employers cannot make matching contributions for employees

the main difference between a traditional IRA and a Roth IRA is

if meeting the requirements, the distributions from a Roth IRA are tax free while distributions from TIRAs are taxed as ordinary income

a 457 plan

is a type of deferred compensation plan for employees of state and local munis

how often can an IRA be rolled over to another IRA?

it may be rolled over once every 12 months

a deferred compensation plan

might not protect the employee from losing the deferred compensation should the employee leave the company before retirement

Greater Growth Capital (GGC), a FINRA member firm, has just be acquired by Better Retirement Outcomes (BRO), a much larger FINRA member. if GGC would like to effect a bulk transfer of its customer accounts using a negative consent procedure, FINRA rules

prohibit GGC from charging a fee to any existing GGC customers who decide to transfer their accounts to a different firm

your customer has contributed $1k annually into her RIRA for seven years. which of the following statements concerning her RIRA distributions is true?

she will not be taxed on the distributions if she is over age 59.5 and the money has been held in the account for 5 years beginning with the first tax year for which a contribution was made to any RIRA established for her

the owner of an IRA, age 45, has contributed $10,000 to an account, and the IRA is now worth $20,000. the owner is going to convert the entire $20,000 into a Roth IRA. what are the tax consequences of this conversation?

the $20,000 is taxable as ordinary income in the year of conversion

one of the most important characteristics of a profit-sharing plan is that

the employer is not required to make a contribution if the company has no profits

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