Investment Suitability Flashcards
(25 cards)
General Partnership
Partners have unlimited liability, not a seperate entity from the partners, no double tax on business/partners so each partner must report profit/loss.
Limited Partnership.
Has one GP and LP’s, General Partner run the business, Limited Partners are passive/ investors,
C Corporation
Seperate legal entity, highly regulated, high admin costs, double taxation (entity and Shareholders), pay Corp taxes,
S Corporation
Not taxable entity because it passes income/ losses to the 100 shareholders/participants. Participants have to report the income and get taxed at their income levels. Similar to LLC
Per Stripes
Equally distributed.
Per Capita
Distributed to remaining children
Defined Benefit retirement plan
Employer sets the amount of benefit to the employee. These are being phased out.
Defined Contribution plan
Less expensive for employer. Set contributions IF the employee contributes. More common than Defined Benefit plans.
SEP
Simplified Employee Pension plans. Simpler than IRA’s, used lots for self employed people, or employers contributing directly into the IRA (SEP-IRA). Available for the employer (obviously cuz it’s for self employed, and their employees.
SEP-IRA eligibility
Employer must contribute the same % to each employee in the year but it can change year to year cuz it’s flexible.
Age 21. Worked for the employer 3 out of 5 recent years. Has received wages from the employer.
SEP. contribution limits
The Lesser of. 25% of employee’s income or 69k for 2024. Employer can contribute, NOT Employee.
SEP advantages
Contributions are tax deductible and earnings are not taxed till withdrawal (like an IRA), employer not locked in at a rate or to even do it, sole proprietors & partnerships can set up SEPs, low admin costs
SIMPLE
401(k)
403(b)
457(b)
Coverdell Accounts
(Remember Cover-Dell the computer company for college kids)
529 Education Savings Plan
Tax deferred on growth, withdrawals are tax free if used for qualified education expense (tuition, fees, room and board, computers, books/supplies and up to 10k in k12 expenses). 10% penalty and income tax on anything not a qualified expense.
Contributions have to follow gifting rules like can’t exceed annual 18k limit of tax free gifting.
Advantages. No income limits, no age limit for using the funds for beneficiary, no contribution limits.
UGMA
UTMA
HSA
If not used for qualified health expense. 20% penalty and tax.
If it has both Aggregate deductible (family deduct able) and embedded (individual) then the contribution limit is as follows.
Lesser of- max annual contribution limit, the aggregate deductible, or embedded deductible * the # of covered family members.
QDRO
Joint Tenants with Rights of Survivorship
Both own the acct, each has 50% undivided interest, but if one dies the other inherits it all.
This avoids probate.
Does not avoid estate taxes.
JTWROS
Joint Tenants with Rights of Survivorship
Both own the acct, each has 50% undivided interest, but if one dies the other inherits it all.
This avoids probate.
Does not avoid estate taxes.
Tenants in Common
Unequal ownership is permitted. But their chunk of interest gets passed to the estate/will/ beneficiaries.