The Employee Retirement Income Security Act of 1974 (ERISA) covers which of the following?
[A] Retirement accounts of public sector employees.
[B] Retirement accounts of private sector employees.
[C] Retirement accounts of public and private sector employ
[B] -
ERISA covers Retirement Plans of private sector employees. Its primary purpose is to protect employees from the mishandling of retirement funds.
A wife owns a small business and has net income of $100,000 for the year. Her husband was hired by her as an accountant for her business and was paid $30,000. Which of the following is true concerning the amount that can be contributed to an IRA?
[A] The
[D] -
The IRS allows a maximum of $5,500 to be deposited into an IRA in a given year.
All of the following are features of a tax-qualified retirement plan offered by an employer, EXCEPT:
[A] In certain types of plans, employees can contribute and deduct their contribution in the year it was contributed.
[B] In certain types of plans, emplo
[C] -
Typically, contributions made by an employer are NOT taxed to the employee in the year that contributions were made and the funds grow within the retirement plan on a tax-deferred basis. All of the other statements are features of tax-qualified reti
One of your clients wishes to discuss the investment of $60,000. The client wants to begin saving for college for his three young children and wishes to get the most growth and the best possible tax advantages. He is in the highest tax bracket and will be
[D] -
Each of the plans listed will either have tax consequences or does not meet the desired criteria other than the 529 Plan. UGMA accounts transfer directly to the minor when the child reaches the age of majority. Mutual funds will be subject to taxati
In 2015, a married couple are both employed and are not covered under a Keogh Plan or a pension plan. They both wish to open IRA accounts. To make the maximum tax-deductible contribution, they should each deposit which of the following?
[A] $2,150 each in
[D] -
Because neither the husband nor the wife are participating in a Keogh plan or pension plan, both are allowed to make full contributions to their IRAs. The maximum an individual can contribute as tax-deductible contribution in 2015 is $5,500 per year
All of the following statements regarding non-qualified deferred compensation plans are false EXCEPT
[A] Any deferred compensation must be held at a bank in escrow.
[B] A special bank account must be opened in which the employee will deposit any taxes tha
[C] -
If a company goes out of business, there is no guarantee that any deferred compensation will be available for distribution.
Required minimum distributions (RMDs) must begin no later than April 1st following the calendar year in which the owner reaches age 70 � for which of the following retirement plans?
(i) Traditional IRA
(ii) Roth IRA
(iii) 401 (k) Plan
(iv) 403 (b) Plan
[A
[C] -
All of the retirement plans listed have a required minimum distribution to start no later than April 1st following the calendar year in which the owner reaches age 70 � except for the Roth IRA. In a Roth IRA the owner is not required to begin distri
Which of the following is correct regarding the writing of covered calls under ERISA regulations?
[A] There are no restrictions on covered call writing.
[B] It is not allowed.
[C] It may be done only if it conforms with the plan's overall objectives.
[D]
[C] -
Under ERISA regulations, if the plan's objectives allow it, covered call writing can be done.
Concerning qualified profit-sharing plans, it is correct to state that:
[A] Under the plan, employee benefits are fixed and not dependent on the plan's performance.
[B] Interest, dividends and capital gains which are generated by a plan's assets are subje
[D] -
Qualified profit-sharing plans allow employees to share in the company's profits on a tax-deferred basis. If there are no profits, the firm does not contribute to the plan. Assets are taxed only upon withdrawal from the plan. Any contributions the f
A single individual who is not an active participant in a qualified retirement plan, earned $28,000. The maximum tax deductible contribution that can be made to an IRA is?
[A] $2,000
[B] $3,600
[C] $5,500
[D] $7,000
[C] -
Individuals who are not active participants in an employer sponsored retirement plan may contribute up to $5,500.00 into an IRA without regard to their level of adjusted gross income.
Which of the following is correct concerning a premature withdrawal from an Individual Retirement Account?
[A] A 6% penalty is imposed.
[B] A 10% penalty is imposed.
[C] The withdrawal is tax free.
[D] The withdrawal is taxed as a capital gain.
[B] -
The penalty imposed on premature IRA distributions is 10%.
Chuck is being laid off of his position at his employer. He has a Qualified 401(k) Plan with this employer, but because of the circumstances of his termination, he refuses to maintain any contact with the former employer or the 401(k) Plan that was provid
[B] -
Chuck has 60 days to roll the funds into another 401(k) Plan or into a Traditional IRA in order to avoid taxation and/or penalties for early distributions if he is under 59 1/2. Funds can be rolled into an IRA and Chuck is not forced to pay taxes as
In 2018, an attorney who is not an active participant in a retirement plan earns $150,000 annually and the attorney's spouse is unemployed. The maximum tax deduction allowed under IRA Federal Tax rules is?
[A] $5,500
[B] $2,000
[C] $11,000
[D] $3,000
[C] -
An IRA for an eligible unemployed spouse: The maximum deductible contribution is $11,000.00 ($5,500.00 per person).
All of the following statements about Sec. 529 Education Savings Plans/Qualified Tuition Plans are true EXCEPT:
[A] The various states that sponsor these plans set the minimum and maximum contribution limits for their plans
[B] Maximum contribution limits
[C] -
Withdrawals from the plan can only be made by the owner of the account, not the beneficiary of the account. With limited exceptions, the owner can only make withdrawals for qualified education expenses without incurring taxes and penalties. All of t
An employee of a publicly-traded corporation would likely be eligible for all of the following types of retirement plans EXCEPT:
[A] An employer-sponsored 401(k) plan
[B] An individual retirement account (IRA)
[C] A 457 deferred compensation plan
[D] A Ro
[C] -
An employee of a publicly traded company in the private sector would not normally be eligible for a 457 plan. These plans are offered to employees in the public sector, such as those employed by municipalities such as States, Cities, and education/t
Under the provisions of ERISA, a pension fund manager should consider which of the following most important when making investment decisions for a pension fund?
[A] Maximum current income.
[B] The choice of the brokerage firm to execute the order.
[C] The
[C] -
The overall objective of the portfolio should always be the primary concern to a fund manager.
Under the provisions of ERISA (Employee Retirement Income Security Act), the use of index options is:
[A] prohibited because of the speculative nature of these instruments
[B] allowed only if the strategies followed are in compliance with the objectives a
[B] -
Under the provisions of ERISA, covered call writing and transactions in index options can be done if the plan's objectives allow it.
Contributions to an IRA may NOT be invested in:
[A] stocks
[B] bonds
[C] mutual funds
[D] collectibles such as antique coins and precious stones
[D] -
IRA contributions may not be invested in collectibles (e.g. antique coins, precious stones, stamps, etc.).
Money withdrawn from a Keogh Plan or Individual Retirement Plan by an individual is normally:
[A] Taxed as ordinary income
[B] Tax exempt
[C] Taxed as long-term capital gain
[D] Taxed 60% as a long-term gain and 40% as ordinary income
[A] -
Withdrawals from Keogh or IRA would be taxed as ordinary income and, if the withdrawal was made early, it would be subject to a penalty.
As BOM, one of your RRs comes to you with a letter to a client about a 529 education savings plan account. The client's child is expected to graduate from high school in the near future. What else should the RR disclose in relation to this plan?
[A] Your
[C] -
The client needs to know that withdrawals used for qualified education costs including tuition, fees, books and room and board are allowed tax-free. Beneficiaries can be changed by the account holder.
A 401(k) plan is established by a:
[A] self-employed individual with contributions based upon the individual's self-employed income
[B] for-profit corporation with contributions made by employees as a salary reduction
[C] not-for-profit organization with
[B] -
A 401 (k) plan is established by a for-profit corporation with contributions made by employees as a salary reduction.
The primary purpose of ERISA in setting minimum standards and reporting requirements for retirement plans is to protect
[A] against a registered representative's mishandling of a client's portfolio
[B] all employees from employer's mishandling of retireme
[B] -
The primary purpose of ERISA is to set minimum standards and reporting requirements for retirement plans to protect employees from the mishandling or retirement funds.
A Keogh Plan may be referred to as all of the following EXCEPT:
[A] A tax deferred investment.
[B] An HR 10 Plan.
[C] A tax free trust.
[D] A self-employed retirement plan.
[C] -
Keogh Plans may not be referred to as a tax free trust, tax deferred is accurate.
A plan administrator of a self-directed qualified retirement plan, such as a Sec. 401(k) plan, must disclose to plan participants investment related information about each available investment option before the plan participant directs his or her investme
[B] -
The Department of Labor regulations require that the investment related information must generally be in the form of a chart and be disclosed to plan participants before they direct their investments and then, at least annually thereafter.
One of your clients is a 24 year old student and wants to plan for paying for all of her higher education expenses. Of the choices below, which would be the most appropriate choice for your client?
[A] 5 year Savings bonds
[B] A Coverdell Education Accoun
[D] -
The 529 Education Savings Plan would be the best choice for this client because the savings bonds would not be liquid, Coverdell Plans do not allow contributions after age 18 and a prepaid tuition plan would only cover educational units and not all
A doctor plans to retire from his corporation and take his retirement plan in a lump sum. Under the IRA rollover rules, how long does he have to invest his benefit check in a new IRA before incurring a tax liability?
[A] 30 days.
[B] 60 days.
[C] 90 days.
[B] -
An individual has 60 days to invest benefits from a retirement plan into a new IRA before incurring a tax liability. (Rollover)
An investor interested in obtaining an Official Statement for a particular state's 529 Plan would contact which of the following?
[A] SEC - Securities Exchange Commission
[B] FINRA - Financial Industry Regulatory Authority
[C] MSIL - Municipal Securities
[C] -
Official Statements for a state's 529 Plan must be filed with the Municipal Securities Information Library (MSIL) and are available to the public.
When an Ad for a municipal 529 plan is going to be run, it must include a toll-free telephone number where the investor can obtain the total return information
[A] Current to the most recent month end
[B] Current to the most recent year end
[C] For the la
[A] -
MSRB rules require that ads for 529 Plans must include a toll-free telephone number where the investor can obtain the total return data current to the most recent month end.
Paul and Mary Smith own a small candy shop. Both Paul and Mary have established traditional IRA's, contribute to them annually to provide for their retirement and have designated each other as beneficiary to their accounts. Paul and Mary have two grown ch
[B] -
The surviving spouse would become the owner of the IRA since they have named each other as beneficiary and the account would be placed in the name of the surviving spouse.
Which of the following would be an allowable contribution into a self-directed Individual Retirement Account?
[A] Stock
[B] Mutual fund shares
[C] U.S. Treasuries
[D] Cash
[D] -
Contributions to an IRA must be in cash. The contributions may be invested in stock, mutual funds, and U.S. Treasuries. The question is asking about "contributions" into the IRA - NOT allowable investments.