unit 24 series 65
One of your clients asks about a Coverdell Education Savings Account for college savings. To avoid income taxation and penalties, your advice is that these funds must be used before the student reaches age
30
Minnie's Uncle Bob would like to contribute to his one-year-old niece's education expenses. He is able to contribute a maximum of $1,200 per year. There is no other family member in a position to make a contribution. If minimizing the taxes at withdrawal and low cost investing, such as index mutual funds, is the objective, which of the following would you recommend?
Coverdell ESA
You are discussing features of qualified pension plans with a client. You state that in one type of plan "the eventual amount of pension benefits will depend upon the fund's investment performance." You must be referring to which of the following?
Defined contribution plan
If an investor received a lump-sum distribution from a 401(k) plan when he left his job, he may I. roll over his account into an IRA within 60 days II. transfer his account without taking possession of the money III.keep the funds and pay ordinary income tax IV. invest in a tax-exempt municipal bond fund to avoid paying tax
I and III
Which of the following statements regarding a qualified profit-sharing plan is TRUE?
It must be established under a trust agreement.
A client is covered by a noncontributory pension plan. If his employer has terminated the pension plan and made lump-sum distributions, which of the following actions should the client take?
Roll over the distribution into an IRA within 60 days to maintain tax-deferred status
A frequent concern of parents initiating a savings plan for the college education of their child is the lack of control over the assets, particularly if the child decides to forego higher education. When you have a client who shares this concern with you, it would be most appropriate to suggest
a Section 529 plan.
Each of the following individuals is eligible to participate in a Keogh plan EXCEPT
an executive of a corporation who receives $5,000 in stock options from his company.
Under ERISA, a fiduciary must act in all of the following ways EXCEPT
confining investments to only those most likely to achieve growth
IRAs and Keogh plans are similar in the following ways EXCEPT
identical amounts of contributions are allowed
The nondiscrimination rules imposed on qualified retirement plans by the Internal Revenue Code are intended primarily to ensure that retirement plans do not discriminate
in favor of a company's owners, top executives, and key employees
One of the advantages of using a 529 plan rather than a Coverdell ESA to fund higher education is
there is no age limit by which time the funds must be used.
Which of the following securities is most suitable for an investment adviser representative to recommend to a 26-year-old customer opening an IRA?
Growth stock mutual fund
The Employment Retirement Income Security Act of 1974 (ERISA) is
a federal law regulating many aspects of private retirement plans
Which of the following regarding customer accounts is NOT true? A)Stock held in a custodial account may be registered in the name of the minor. B)Asset held under JTWROS goes to the survivor(s) in the event of the death of one of the tenants. C)In some cases, a TOD account is referred to as a POD account. D)Margin trading in a fiduciary account requires special documentation.
A. Stock held in a custodial account may be registered in the name of the minor.
Which of the following statements are TRUE about both an individual Roth IRA and a Roth 401(k) plan? I. Contributions are made with after-tax dollars. II. One must have AGI below a certain level in order to maintain either Roth. III. If all the conditions are met, withdrawals are tax free. IV. There are no RMDs at age 70½.
I and III
One of your clients has recently turned 70½ and has questions about RMDs. The client has a traditional IRA, a rollover IRA, and 401(k) plans from 2 previous employers. When computing the RMDs, I. the RMD from each IRA is computed and may be made from one or both of them II. the RMD from each IRA is computed and must be paid from that IRA III. both 401(k)s are combined to compute the required distribution, which may be made from one or both of them IV. the RMD from each 401(k) is computed and must be paid from that 401(k)
I and IV
Saving for higher education using which of the following tools will generally result in the worst outcome when filing the FAFSA form?
UTMA
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
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?
Section 529 plans
