Retirement Plans
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| True or False: Investment companies issue annuities | False, insurance companies issue annuities
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| What are the two types of annuities? | Fixed Annuity and Variable Annuity
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| True or False: Fixed annuities are less risky than variable annuities | True
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| When do fixed annuities pay interest to investors? | When the investment is withdrawn
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| True or False: Variable annuities are securities | true
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| 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.
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| True or False: Variable annutities garuntee a specific return? | False
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| Variable annuitites allow an investor to select investments similar to _________________ within the annuity. | Mutual Funds
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| True or False: Investments within a variable annuity are managed by the insurance company. | False, they are managed by an outside investment management group.
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| Accumulation Period | the "pay in" or purchase and growth period
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| The Annuity Period | Payout period, earnings are taxed as ordinary income when withdrawn during this period
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| 3 types of annuity payouts | Single Payment/Immediate Payout Single Payment/Deferred Payout Periodic Payment/Deferred Payout
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| 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.
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| 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
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| 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.
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| What two investment choices to insurance companies have when it comes to variable annuities? | Mutual funds, or have professionals manage the money
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| 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).
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| True or False: Annuity holders have voting rights | True when the investment account is actively managed by a manager
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| Accumulation units are __________ units with _____________ values | increasing; fluctuating
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| What is the annuity period? | The time defined in the variable contract for the annuitant to receive payments from the insurance company.
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| 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.
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| The value of annuity units vary depending on _________________ | the underlying securities
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| The number of annuity units is always ______ while the value of each unit _________ | same; changes
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| 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
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| If the annuitant wishes to receive payments from the annuity without any concern for beneficiaries, the annuitant can choose a ____________________ | Life Annuity
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| If the annuitant wishes to recevie payments for a minimum length of time, he/she can chose a __________ | Life Annuity, Period certain
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| If an annuitant wishes to receive payments for themselves as well as beneficiaries, they would choose a | Joint and last survivor life annuity
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| The garuntees an insurance company provides an annuitant are: | Expenses will not exceed a certain amount; mortality garuntee that garuntees payment until annuitant dies
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| The total combined sales charges that can be decucted from a variable annuity purchase cannot exceed ____ | 8.5%
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| True or false: An annuity contract must be registered in every state that it is offered. | True
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| The people who sell variable annuities must be registered with: | State and FINRA
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| People who sell the annuity separate contracts must be registered with: | State and SEC
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| What is the difference between a Qualified and a non-qualified plan? | Qualified = before tax money (tax deferred) Non Qualifed = after tax money
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| Withdrawals from a non qualified plan are taxed as _________________ | ordinary income
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| When withdrawing money from a non qualified plan, ___________ is taken first and then ____________ is taken after that. | Appreciation (taxed), principal (tax-free)
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| 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
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| In a qualified plan, taxes are ________ | deferred
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| In a qualified plan, an individual must take contributions by age ______ | 70 1/2
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| A _________________ is a plan in which the benefit is predetermined based on the participant's current compensation. | Defined benefit plan (pension)
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| The amount a defined benefit plan pays depends on what? | years of service, and compensation
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| A ______________ allows employers and employees to establish retirement savings accounts for each individual employee. | Defined Contribution Plan
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| Profit sharing plans allow companies to vary contributions based on _______ | Profitability
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| 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
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| _____________ allows small employers to establish retirement accounts on behalf of employees who qualify. | SEP
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| What is the maximum amount a self employed person can contribute to their retirement plan?. | $50,000 or 100% of income, whichever is less
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| True or False: A self employed person must contribute to full time employees retirement accounts if they want to own one for themselves? | True
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| Who is a full time employee in a self owned business? | 21 yrs old, 1 year of service, 1000hours service
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| A _______________ allows an individual to transfer an insurance product into another insurance product or annuity | 1035 Exchange
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| True or False: Municipal bonds are suitable investments for a pension plan | False
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| 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
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| True or False: $$ contributed to a Roth IRA is Pre-Tax | False
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| The first dollars taken in a Roth IRA is the _______________ | contribution
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Created by:
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