1: TYPES OF ACCOUNTS (221) Flashcards
(155 cards)
1
Q
Would a bank employee who only sells fixed annuities probably be able to open an account at a FINRA member firm without notifying or receiving permission from her employer?
A
Yes, probably
Someone selling fixed annuities only (not a security like variable annuities) is most likely not associated with a member.
2
Q
Would a muni bond be a good investment for a qualified account plan?
A
No
Muni bonds provide tax-exempt interest payments so they offer lower yields. Because earnings in a qualified retirement account grow tax deferred, the muni bond is a shitty investment.
3
Q
Define: specified adult
A
65+
or
18+ who probably has an impairment
4
Q
T/F: Contributions to Roth IRAs are made with after-tax dollars
A
True
5
Q
Do you pay taxes up front with a Roth IRA
A
Yes
6
Q
T/F: You pay taxes when you put money into a Roth IRA
A
True
7
Q
T/F: In a Roth IRA, you can withdraw your contributions at any time, for any reason, without tax or penalty.
A
True
8
Q
Are distributions from a Roth IRA taxed?
A
No, distributions are received tax free
9
Q
Who would use a 403(b) plan?
A
Employees of nonprofit organizations (such as hospitals and schools)
10
Q
Does the beneficiary need to be related to the contributor in a Coverdell Education Savings Account (ESA)?
A
No
The beneficiary need not be related to the contributor(s)
11
Q
Are fixed annuities a security?
A
No
12
Q
Are variable annuities a security?
A
Yes
13
Q
Max contribution to any one beneficiary in a Coverdell Education Savings Account (ESA)
A
The maximum contribution permitted for any beneficiary is $2,000 per year
14
Q
Can balances in a Coverdell Education Savings Account (ESA) be used for purposes other than education?
A
No
Account balances may be used for education only.
15
Q
T/F: IRAs can be opened as margin accounts
A
False
IRAs can only be cash accounts
16
Q
Can you get tax free distributions on a Roth IRA if you satisfy the holding period
A
Yes
17
Q
Distributions on a Roth IRA are tax free if the account holder is at least ____ years old, and has had the account for at least ___ years
A
59.5 years old
Held account for 5 years
18
Q
Is an officer of a Bd considered an employee?
A
Yes
19
Q
Do C corps provide favorable tax treatment of gains or losses?
A
No
20
Q
Could an Indian citizen own an S Corp?
A
No
only U.S. citizens or resident aliens can own an S Corp
21
Q
T/F: Contributions to a Coverdell ESA are made with after-tax dollars.
A
True
22
Q
T/F: In a. Oversell education savings account, distributions used for qualified educational expenses are tax free.
A
True
23
Q
Are commodities permitted in Keogh plans?
A
No
24
Q
Are precious metals permitted in Keogh plans
A
No
25
Are uncovered options allowed in Keogh plans?
No
26
Is OFAC for terrorists?
Yes
27
T/F: Not all financial institutions are required by federal law to maintain a customer identification program and check the identifying information against a list maintained by the OFAC
False
| All financial institutions have to
28
How often can you roll over an IRA w/o getting a penalty
Annually
29
What makes a pattern day trader
four or more day trades in a five-business-day period.
30
Are deferred compensation plans qualified?
No
| They are non qualified
31
T/F: Under most circumstances, the annual contribution to a SEP IRA will be higher than those allowed for education savings accounts or traditional or Roth IRAs.
True
32
T/F: There is no penalty is charged for failing to withdraw funds after age 72 on a traditional IRA
False
| RMDs start at 72
33
Would you have to ask an applying customer to a brokerage if she has a brokerage account at another broker-dealer?
No
| Info not required
34
If a broker-dealer reserves the right to disclose nonpublic personal information to third nonaffiliated parties, it must notify the customer at the time of the account opening, then how often offer that
Annually
| Give notice at account opening, then every year
35
Can someone under the age of 21 participate in a company's qualified retirement plan?
No
36
T/F: The most beneficial corporate pension plan for a younger employee would be the defined contribution plan. The employee has many years in the workforce, so the investments made with the defined contributions will have a maximum amount of time to grow.
True
37
Would community property laws be applicable to two cousins with a joint account?
No
Community property laws in jurisdictions presuming that type of ownership designation only applies to marital property (property acquired by the two individuals while married). Therefore, community property laws would not be applicable to siblings.
38
Can deferred compensation plans be discriminatory?
Yes
| Deferred compensation plans are not qualified plans and may be discriminatory
39
Are deferred compensation plans qualified plans?
No
40
Does aSEP IRA have high annual contributions?
Yes
41
Regulation BI uses the phrase ______ to determine when something is a recommendation
Regulation BI uses the phrase "a call to action" to describe the essence of a recommendation
RR has to actually recommend an action to take
42
Are contribution limits the same in a traditional and Roth IRA?
Yes
43
Do Roth IRAs have RMDs?
No
44
Do traditional IRAs have RMDs?
Yes
45
Can you move money from one person's individual account into another persons individual account if you have both their permission?
If you get authoirzation from both, yes you can
46
Are uncovered call options okay in a a qualified plan?
No
47
T/F: Contribution limits are different for traditional and Roth IRAs
False
| contribution limits are the same for both
48
Can you contribute to an IRA after the first tax filing deadline (April 15) if you file an extension
No
| You may contribute to an IRA only until the first tax filing deadline (April 15) even if you filed an extension.
49
Can contributions to an IRA made between Jan 1 and April 15 be used for:
the current year
the past year
or both?
Both
50
T/F: If you file your taxes on Jan 15, you can't deduct an IRA contribution you're going to make on April 15
False
| If you file your taxes on January 15, you may deduct your IRA contribution even if it is not made until April 15.
51
T/F: you may contribute to this year's IRA from January 1 of this year until April 15 of next year.
True
52
T/F: All corporate pension and profit-sharing plans must be set up under trust agreements.
True
53
In corporate pension plans and profit sharing plans, who assumes fiduciary responsibility for the plan?
The plan's trustee
54
T/F: Prior written notification/consent is needed is an RR opens a 529 plan at another Brokerage
False
55
T/F: Prior written noticication/consent is needed if a clerical employee of a BD opens a margin account at another BD
True
56
3 Accounts you can open at another BD without prior written notification/consent
1. 529 plans
2. Mutual Funds
3. Variable annuities
57
Do employers receive tax breaks for contributions to a qualified retirement plan?
Yes
58
Can employees defer part of their salary to make contributions to a qualified retirement plan?
Yes, in some cases
59
What is the point of an employee defering part of their salary to contribute to a qualified retirement plan?
It reduces their taxable income
60
2 types of qualified retirement plans
Defined conribution
and
Defined benefit
61
Do employees get a guarenteed payout when they retire or begin taking withdrawls on a defined benefit plan?
Yes
62
Are pensions a defined benefit plan
Yes
63
Who is responsible for all of the planning and investment risk of a defined benefit plan
The EPMPLOYER is responsible
64
Are pensions a defined-contribution plan?
No pensions are a defined benefit plan
65
Are 401(k)s a defined-benefit plan?
No, 401(k)s are a defined contribution plan
66
What's the most basic difference between qualified retirement plans and non-qualified ones?
Qualified meets ERISA quidelines
| Non-qualified falls outside of ERISA guidelines
67
Are deferred-compensation plans qualified or nonqualified?
Nonqualified
68
Are 403(b) plans qualified plans?
Yes
69
Are profit sharing plans qualified or non qualified plans?
Qualified
70
Are executive bonus plans qualified plans?
No
71
T/F: Split-dollar life insurance plans are qualified plans?
False
| split-dollar life insurance plans are nonqualified
72
T/F: In a profit sharing plan, the amount of the contribution depends on the employers profitability
True
73
Is growth in qualified pension plans tax free?
No
| Growth in qualified pension plans, as well as other qualified plans, is tax deferred, not tax free.
74
Is growth on qualified plans tax deferred?
Yes
75
Non discrimination rule
clause found in qualified retirement plans stating that all employees of a company must be eligible for the same benefits, no matter their position within the company.
76
Can non qualified plans be discriminatory?
Yes
77
Who are non qualified plans usually for?
Highly paid employees
78
T/F: Contributions to a non qualified plan are usually deductible to the employer
False
| The contributions made to these types of plans are usually nondeductible to the employer and taxable to the employee.
79
Are contributions to a non-qualified plan taxable to the employee?
Yes
80
What is the point of employees deferring taxes until retirement in a non qualified plan?
They’re usually in a lower tax bracket
81
What type of account allows for the irrevocable transfer of almost any kind of asset, including works of art and real estate, for the benefit of a minor?
UTMA
UTMA can have almost any asseT
“T” for UTMA
82
Do earnings in a qualified retirement plan grow tax deferred
Yes
83
Do contribution amounts vary in an employer-sponsored defined benefit plan?
Yes
84
Which has RMDs: traditional or Roth IRA
Traditional has RMDs
85
T/F: Growth in a qualified pension plan is tax tax free income
False
| Growth in qualified pension plans, as well as other qualified plans, is tax deferred, not tax free.
86
T/F: Growth in a qualified pension plan is taxable at the time of distribution
True
87
T/F: Roth IRAs have greater contribution limits than traditional IRAs
False
| both traditional and Roth IRAs is that contribution limits are identical.
88
Are earnings from a non deductible contribution in a traditional IRA tax deferred?
Yes
All earnings, whether from deductible or nondeductible contributions, are tax deferred & all earnings are taxable as ordinary income upon withdrawal
89
Are earnings from a non deductible contribution to a traditional IRA taxed as ordinary income upon withdrawal?
Yes
All earnings, whether from deductible or nondeductible contributions, are tax deferred. Therefore, all earnings are taxable as ordinary income upon withdrawal
90
Defined benefit plans are aka as ____
Pension plans
91
Regulation BI stands for _____
Best interest
92
Does Regulation BI apply to account reccomendations?
Yes
93
When can you no longer mame contributions to this year for an IRA
April 15 of the next year
| even if you filed an extension
94
Is growth in qualified pension plans tax free or tax deferred?
Growth in qualified pension plans is tax deferred not tax free
95
Does a qualified pension plan have to comply with nondiscrimination rules?
Yes
96
Are UTMA and UTGMA custodial accounts?
Yes
97
Qualified withdrawls from a section 529 plan include payments of interest on student loans up to a lifetime maximum of $_____ per child.
$10k
98
Is an actuary needed for a defined benefit plan?
Yes, to see how much employers have to contribute to assure the payment of the benefit amount
99
Is a actuary needed for a defined contribution plan?
No
100
Can tennants in common own different percentages of the property?
Yes
101
What happens to property in a TIC account upon death
It goes to that person's estate
102
In a TIC agreement, does a change of members break the original agreement
No
103
What happens if someone dies in a joint tenancy account
Property goes to the surviving owner
104
Does TIC have automatic rights of survivorship?
No
105
T/F: Not all parties on a JTWROS can enter orders
False
| All parties can enter orders
106
T/F: Limited power of attorney enables a nonaccount owner to enter trades and withdraw assets?
False
| Limited power would only allow nonaccount owner to enter trades, not withdraw
107
T/F: For anyone other than the account owner, entering trades and withdrawing assets requires a full power of attorney.
True
108
T/F: a limited power of attorney would allow a non account owner to enter trades?
True
109
UTMA accounts allow the custodian to use the funds for almost anything that is a benefit to the minor except what 3 things
parental obligations:
1) food
2) clothing
3) shelter
110
T/F: the custodian of a UTMA account could use the funds for summer camp for the minor
True
111
T/F: the custodian of a UTMA account could use the funds pay for the minor's summer camp
True
112
T/F: The custodian of a UTMA account could use the funds to pay for clothes for the child
False,
| Food, shelter, and clothing are considered parental obligations so they can't use the funds for that
113
T/F: Parents can use frunds from a UTMA account for almost anything that is a benefit to the minor
True
114
T/F: Assets from any qualified corporate plan may be rolled over into an IRA
True
115
Would a RR be a fiduciary if he gets discretionary acuthorization from a slcient?
yes
116
If a rep sits on the board of directors for a charity, does that classify him as a fiduciary?
Yes
117
Joint accounts are aka as ____
Tenants in common (TIC)
118
T/F: In a TIC account, each party must specify a percentage of interest in the account.
Tru
119
Does all income/loss flow through to owners of an S corp
Yes
120
Do income/losses flow through to owners in a GP
Yes
121
Is income and losses flowed through to owners of a LP
Yes
122
Do S corps get doubule taxed?
No
| all income/loss passes through to the owners
123
Would a GP get double taxed?
No
| since all it's income/loss is passed to the owners
124
T/F: with C corps, corporate earnings are taxed once at the business level but avoid taxation when the earnings are paid to shareholders as dividends
False
| Earnings are taxed both at the business level and when paid to shareholders as dividends
125
Are executors of an estate considered a fiduciary?
Yes
126
Does being a board member of a foundation make an RR count as a fiduciary?
Yes
127
In a traditional IRA, is the principal of a non deductible contribution tax free upon qualified withdrawn?
Yes
| The principal is tax free but the rest of the balance in the account is taxable as ordinary income
128
T/F: All earnings in a traditional IRA, whether from deductible or nondeductible contributions, are tax deferred.
True
129
Are tax free bonds considered a good investment for a traditional IRA?
No
| The tax free benefit is lost
130
If something is tax deferred is it probably taxable upon withdrawal?
Yes
131
In a minors custodial account, who has the authority to make the trading decisions, the minor or the custodian?
The custodian
132
Is a minor custodial account who is the beneficial owner, the minor or the custodian?
The minor is the beneficial owner
133
Defined benefit plans are also known as what?
Pension plans or qualified benefit plans
134
What is a qualified retirement plan
A qualified retirement plan is a retirement plan recognized by the IRS where investment income accumulates tax-deferred
135
Is income tax deferred in a qualified plan
Yes
136
Who makes the trading decisions in a minors custodial account
The custodian not the minor
137
Are variable annuities tax deferred?
Yes
138
Does a C Corp allow flow-through of business income and losses directly to shareholders in order to avoid double taxation
No
139
When do min distrubutions for a traditional RIA begin
By April 1 of the year after the owner turns 72
140
T/F: RMD for a traditional IRA must begin when the owner turns 72
False
| RMDs must begin by April 1 of the year AFTER the owner turns 72
141
If the daughter of an old client w/ declining cognitive abilities wants to have control over the account, what kind of power of attorney would you give her?
Durable power of attorney
142
Does durable power of attorney survive death?
No
143
Does a durable power of attorey survive the client becoming legally incompetent?
Yes
144
If 3 ppl have a TIC account and one dies, who are now the 3 tennans in the account?
2 alive ppl and the deceased's estate
145
T/F: If two 3 ppl have a TIC account and one dies, the two survivors continue as cotenants with the deceased person's estate
True
146
Do ppl in a JTWROS acct have equal ownership?
Yes
147
T/F: Tennants in a JTWROS account can have uneuqal interest in the account
False,
| Tennants in JTWROS must have equal interest
148
If you want to roll over an IRA, how long after you receive your distrubution do you have to roll it over into anothe IRA
60 days
149
If moving funds to a differnt IRA, how long do you have to reinvest the money to avoid taxes and penalties
Must reinvest within 60 days
150
If a customer opens a cash account, who are all the ppl that need to sign the new account form
Only the princiapl has to sign the form
151
Buying power for day traders
4 times maintenance margin excess
152
Maintenance margin excess is defined as equity in the account above ____
Above the 25% minimum requirement
153
Keogh plan
Keogh plans are tax-deferred pension plans—either defined-benefit or defined-contribution—used for retirement purposes by either self-employed individuals or unincorporated businesses, while independent contractors cannot use a Keogh plan.
Profit-sharing plans are one of the two types of Keogh plans that allow a business to contribute up to 100% of compensation, or $58,000 as of 2021.
Keogh plans have more administrative burdens and higher upkeep costs than Simplified Employee Pension (SEP) or 401(k) plans, but the contribution limits are higher, making Keogh plans a popular option for many high-income business owners.
Because current tax retirement laws do not set apart incorporated and self-employed plan sponsors, the term "Keogh plan" is rarely ever used.
154
Spousal IRA
If spouse has min or no earned income
Other souse can contribute up to indexed maximum to that spouse
>have to have 2 separate IRA
>no such thing as joint IRA
>must file joint tax return
155
Sally Williams is a customer of your FINRA member firm. Sally was recently married and wishes to change the name on her individual account to her new last name. To do this,
A)
the name change must be authorized by a qualified registered principal designated by the member.
B)
Sally must close the old account and open a new one in the new name.
C)
the name change must be authorized by a court of competent jurisdiction.
D)
the name change must be authorized by Sally's spouse.
A) name change must be authorized by registered principal of firm
Explanation
The name change requires approval of a designated principal of the member firm. The principal will want to see evidence of the change in status, such as a marriage certificate, before granting the approval.
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