retirement quiz 1

In 2019, a customer earns $500,000 as a self-employed doctor, and contributes the maximum permitted amount to a Keogh plan. The doctor has a full time nurse earning $25,000 per year. The contribution to be made for the nurse is:

$280,000 - $56,000 = $224,000 of "after Keogh deduction" income. $56,000/$224,000 = 25%. Thus, for the nurse, $25,000 of income x 25% = $6,250 contribution.

Contributions to a Coverdell Education Savings Account must cease when the beneficiary reaches the age of:

18

A parent that has 2 minor children is permitted to contribute:

2000 each child? If one child doesn't go to college can the name go to other childre

The last time to trade an equity option that is about to expire is:

3:00 PM Central Time; 4:00 PM Eastern Time; on the 3rd Friday of the expiration month

529 vs coverdell

529 can contribute a lot but goes only to higher education (hence why you can contribute so much) coverdell can only be 2k per child

Contributions to Individual Retirement Accounts must be made by:

April 15th of the calendar year after which the contribution may be claimed on that person's tax return The best answer is D. Contributions to Individual Retirement Accounts must be made by April 15th (tax filing date) of the year after the tax filing year. For example, a contribution for tax year 2019 must be made by April 15th, 2020.

Which statement is TRUE about the tax deductibility of 529 Plan contributions?

Contributions are generally deductible at the state level

Which statements are TRUE about Roth IRAs?

Contributions can continue after age 70 1/2 Distributions are not required to start after age 70 1/2

A distribution from a Section 529 Plan would be taxable if the beneficiary:

Does not go to college

403(b) Plans are permitted to invest in which of the following?

II Mutual Funds III Fixed Annuities IV Variable Annuities

High earning individuals are prohibited from making contributions to:

ROTH IRA Coverdell ESA's

Contributions to qualified retirement plans, other than IRAs, must be made by:

The date on which the tax return is filed with the Internal Revenue Service

LGIPs marketed by broker-dealers are:

municipal fund security regulated by the MRSB

An individual owns a bicycle repair business as a sole proprietorship. He does not make a lot of money, but he does have $5,000 available for investment this year. The BEST recommendation for this individual is to make a $5,000 contribution to a(n):

11 Roth Ira

A divorced woman with 2 young children has just re-entered the workforce part time and earns $3,000 from this work. She collects another $2,400 per year in alimony payments. The woman wishes to make a contribution to an Individual Retirement Account this year. Which statement is TRUE?

A contribution can be made based only on the income earned from part-time work IRA contributions can only be made based on earned income - meaning income from one's work. Alimony and child support payments are not classified as "earned income" for purposes of making IRA contributions. Thus, a woman who has both earned income from work and who received alimony payments can only make an IRA contribution based on the $3,000 earned from work. (Of course, the big question here is, "If this person only has total income of $5,400 a year, how would she be able to make an IRA contribution since she doesn't even have enough money to eat!")

Which of the following statements are TRUE regarding a joint account with tenancy in common?

A specific percentage ownership is assigned to each party If one party dies, that person's interest goes to his beneficiary or estate

Which statements are TRUE regarding Individual Retirement Accounts?

Investment in U.S. minted gold coins is permitted Investment in U.S. issued securities is permitted

LGIP

Local Gov't Investment Pool -Allow states and local gov'ts to manage cash reserves and receive money market rates on funds. -Invest proceeds of bond offering if used to call in existing bond issue - restrictions apply to type of investments -If to manage cash reserves, only limited to securities on state's legal approved list investment vehicles available to local government entities that permit investment of excess funds

Which of the following statements are TRUE regarding contributions to, and distributions from, non-tax qualified retirement plans?

after tax dollars partially taxed original cost basis

A customer has a 3-year old child and wishes to begin saving for the kid's college education using a tax advantaged investment. The best investment option to meet the customer's objective is a(n):

age weighted 529 or coverdell

The "death benefit" associated with a variable annuity contract:

applies prior to annuitization means that, upon death, the insurance company will pay a beneficiary at least the amount invested in the contract

What will change the cash value of a variable life policy?

changes in the market value

Which of the following statements are TRUE about Keogh Plans?

cont 100 deduct dist 100 taxable

Which of the following are characteristics of Defined Contribution Plans?

contribution is fixed benefit received varies

Which statement is TRUE about Coverdell Education Savings Accounts?

contributions and distributions ar enot tax deductible

All of the following statements are true regarding both mutual funds and variable annuities EXCEPT:

distributions from the underlying mutual fund are taxable to the holder in the year the distribution is made

Which of the following strategies has unlimited loss potential?

short stock/short put

For a qualified retirement plan contribution to be deductible from that year's tax return, the contribution must be made by no later than:

the tax filing date of the following year

All of the following statements are true regarding the annuitization of a variable annuity contract EXCEPT:

variable annuity contracts require the holder to select a Life Annuity - Period Certain payout option

An individual who has completed college has been working for 9 years and is now 30 years old. He is thinking about returning to school in a few years to complete his masters degree and wants to set up a 529 Plan with himself as the beneficiary. Can he do this?

yes - no age restriction

Which statements are TRUE regarding variable annuities during the accumulation phase?

no distributions during accumulation phase payments of fixed and varied can be done

Which statements are TRUE about Coverdell ESAs?

Assets grow tax-deferred and distributions are not taxable if used for qualified educational purposes Unexpended funds can be transferred without tax liability to another relative in the same or younger generation as the beneficiary The best answer is B. Contributions to Coverdell ESAs are limited to $2,000 per child per year and are not tax deductible. Earnings build tax-deferred and when distributions are taken to pay for qualifying educational expenses, the amount distributed is not taxed. If the distribution is not used to pay for qualifying educational expenses, then it is taxable at ordinary income tax rates. High earning adults are prohibited from opening Coverdell ESAs. Unexpended funds can be transferred without tax liability to another relative in the same or younger generation as the beneficiary

A registered representative that wishes to recommend a variable annuity to a customer must make reasonable efforts to obtain the customer's:

I intended use of the variable annuity II investment time horizon III existing assets including insurance holdings IV liquidity needs

ABLE accounts are:

II used to save funds on a tax-deferred basis to pay for the ongoing care of disabled individuals III regulated by the MSRB

Section 529 plans generally permit:

non-tax deductible contributions by the donor non-taxable distributions to the recipient to pay for higher education

Payments received by the owner of a non-tax qualified variable annuity are:

only taxable to the extent of earnings above the holder's cost basis

Which statements are TRUE regarding Roth IRAs?

Roth IRAs allow for the same annual contributions as conventional IRAs An individual can contribute up to $6,000 in 2019 to either a Roth IRA or a Traditional IRA

A self-employed individual makes $95,000 per year. To which type of retirement plan can the maximum contribution be made?

SEP A SEP (Simplified Employee Pension) IRA is usually set up by small business because it simplifies all of the recordkeeping associated with retirement plans. Contribution amounts made by the employer cannot exceed 25% of the employee's income (statutory rate - the effective rate is 20%), up to a maximum of $56,000 in 2019. In contrast, the maximum contribution to either a Traditional or Roth IRA in 2019 is $6,000 (plus an extra $1,000 catch-up contribution for individuals age 50 or older), while the maximum contribution for a SIMPLE IRA in 2019 is $13,000.

An annuitized account in a variable annuity is most similar to:

pension payment

The "death benefit" associated with a variable annuity contract means that if the contract holder dies:

prior to annuitization, the amount invested in the contract is returned to a beneficiary The best answer is A. The "death benefit" of a variable annuity contract is not really much of one. If the contract holder dies prior to annuitization, the insurance company pays the greater of current NAV or the amount invested to a beneficiary. If the contract holder dies after annuitization, there is no more "death benefit."

ERISA regulations cover:

private sector only

Which of the following statements about 403(b) Plans are TRUE?

tax deductible non profit

403(b) Plans are:

tax qualified plans plans available to "not for profit" organizations

If a corporation has an unfunded pension liability, this means that:

the expected future value of fund assets is less than projected benefit claims