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Retirement Plans

QuestionAnswer
True or False: Investment companies issue annuities False, insurance companies issue annuities
What are the two types of annuities? Fixed Annuity and Variable Annuity
True or False: Fixed annuities are less risky than variable annuities True
When do fixed annuities pay interest to investors? When the investment is withdrawn
True or False: Variable annuities are securities true
To sell an annuity, agents must... Have a life insurance liscence, be registered with a broker dealer, be appointed with the insurance company that is offering the variable annuity.
True or False: Variable annutities garuntee a specific return? False
Variable annuitites allow an investor to select investments similar to _________________ within the annuity. Mutual Funds
True or False: Investments within a variable annuity are managed by the insurance company. False, they are managed by an outside investment management group.
Accumulation Period the "pay in" or purchase and growth period
The Annuity Period Payout period, earnings are taxed as ordinary income when withdrawn during this period
3 types of annuity payouts Single Payment/Immediate Payout Single Payment/Deferred Payout Periodic Payment/Deferred Payout
Single Payment/Immediate Payout is suitable for... Retirees that are unhappy with their own form of retirement and elect to take a lumpsum from their present retirement program and buy an annuity.
Single Payment/Deferred Payout is suitable for... People who are still working but have changed occupations. May have a retirement plan and don't need the money until a later date
Periodic Payment/Deferred Payout is suitable for... Person who wants to make payments on an annuity and doesn't need the payout until later on.
What two investment choices to insurance companies have when it comes to variable annuities? Mutual funds, or have professionals manage the money
The investment account of a variable annuity is either a _______________ or a __________________ Unit investment Trust (going into mutual funds) Open End Management Company (actively managed by professionals).
True or False: Annuity holders have voting rights True when the investment account is actively managed by a manager
Accumulation units are __________ units with _____________ values increasing; fluctuating
What is the annuity period? The time defined in the variable contract for the annuitant to receive payments from the insurance company.
An insurance company can make annuity payments in what 3 ways? Lump sum, series of payments over life, series of payments over a specified time.
The value of annuity units vary depending on _________________ the underlying securities
The number of annuity units is always ______ while the value of each unit _________ same; changes
During the payout period, the assets in the seperate account can be managed in two ways: Remain in the seperate account, or transferr into a fixed annuity
If the annuitant wishes to receive payments from the annuity without any concern for beneficiaries, the annuitant can choose a ____________________ Life Annuity
If the annuitant wishes to recevie payments for a minimum length of time, he/she can chose a __________ Life Annuity, Period certain
If an annuitant wishes to receive payments for themselves as well as beneficiaries, they would choose a Joint and last survivor life annuity
The garuntees an insurance company provides an annuitant are: Expenses will not exceed a certain amount; mortality garuntee that garuntees payment until annuitant dies
The total combined sales charges that can be decucted from a variable annuity purchase cannot exceed ____ 8.5%
True or false: An annuity contract must be registered in every state that it is offered. True
The people who sell variable annuities must be registered with: State and FINRA
People who sell the annuity separate contracts must be registered with: State and SEC
What is the difference between a Qualified and a non-qualified plan? Qualified = before tax money (tax deferred) Non Qualifed = after tax money
Withdrawals from a non qualified plan are taxed as _________________ ordinary income
When withdrawing money from a non qualified plan, ___________ is taken first and then ____________ is taken after that. Appreciation (taxed), principal (tax-free)
Six exceptions to early withdrawal penalty are: Death, disability, higher education, first time home purchase ($10,000), medical expenses, payments are taken over life expectancy
In a qualified plan, taxes are ________ deferred
In a qualified plan, an individual must take contributions by age ______ 70 1/2
A _________________ is a plan in which the benefit is predetermined based on the participant's current compensation. Defined benefit plan (pension)
The amount a defined benefit plan pays depends on what? years of service, and compensation
A ______________ allows employers and employees to establish retirement savings accounts for each individual employee. Defined Contribution Plan
Profit sharing plans allow companies to vary contributions based on _______ Profitability
A ___________________ allows a company to establish a retirement program in which either theemployee purchases the comapny stock at a discount or the stock is given to employees based on a bonus program ESOP
_____________ allows small employers to establish retirement accounts on behalf of employees who qualify. SEP
What is the maximum amount a self employed person can contribute to their retirement plan?. $50,000 or 100% of income, whichever is less
True or False: A self employed person must contribute to full time employees retirement accounts if they want to own one for themselves? True
Who is a full time employee in a self owned business? 21 yrs old, 1 year of service, 1000hours service
A _______________ allows an individual to transfer an insurance product into another insurance product or annuity 1035 Exchange
True or False: Municipal bonds are suitable investments for a pension plan False
The maximum contribution to an IRA is ________ $5000 or 100% of income, whichever is less. If the person is over 50 they can contribute $6000
True or False: $$ contributed to a Roth IRA is Pre-Tax False
The first dollars taken in a Roth IRA is the _______________ contribution
Created by: cstrom on 2012-08-31



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