Mutual Funds Distributions
Taxation of Annuities
Qualified Retirement Plans
Non-qualified Retirement Plans
ERISA
100
If an investor neglects or fails to include their tax ID number when purchasing mutual fund shares, the fund must withhold this amount.
What is 28%
100
When an annuitant dies during the accumulation period of a nonqualified annuity, the proceeds exceeding the annuity's cost basis are taxed as this.
What is taxable as ordinary income to the beneficiary.
100
A contractual agreement between a company and an employee in which the employee agrees to defer receipt of current income in favor of payout at retirement.
What is a nonqualified deferred compensation plan?
100
This accronym stands for ERISA- was established to prevent abuse and misuse of pension funds.
What is Employee Retirement Income Security Act of 1974?
200
When these shares are sold, the cost of the shares held the longest is used to calculate the gain or loss.
What is First in, First Out (FIFO)
200
In order for a capital gain or loss to be realized, this must occur. The holding period will define the gain or loss as long or short-term.
What is a sale?
200
Intended plans for self- employed persons and owner-employees of unincorporated businesses or professional practices.
What is a keogh plan?
200
Set up by state and local governments and tax-exempt employers for their employees. They function as deferred compensation plans in which earnings gros tax deferred and growth and accumulation are taxed only at the time of distribution.
What is a Section 457 Plan?
200
Defines when an employer contribution to a plan becomes the employees money.
What is Vesting?
300
The shareholder may elect to use this when redeeming mutual fund shares. The shareholder calculates average basis by dividing the total cost of all shares owned by the total number of shares.
What is Average Cost Basis?
300
The most popular plan which allows employees to elect to contribute a specific percentage. Employers may make matching contributions.
What is a 401(k)?
300
Allows employees to authorize their employer to deduct a specified amount for retirement savings from their paychecks.
What is a payroll deduction plan?
300
All employees must be covered if they are 21 years or older and have performed one year of full-time service (ERISA defines as 1,000 hours or more)
What are the the eligibility rules for participation?
400
Defined as short- or long-term capital gains based on how long the mutual fund held the securities, not on how long the customer owned the fund.
What is Capital gains distributions?
400
Under this rule, to accomplish a tax-free exchange, the approved policies do not have to be issued by the same company.
What is Internal Revenue Code Section 1035?
400
Promises a specific benefit at retirement that is determined by a formula involving typical retirement age, years of service and compensation level achieved. Ideal for older employees nearing retirement.
What is a defined benefit plan?
400
Created to encourage people to save for retirement, Anyone who has earned income under the age of 70 1/2 is allowed to make an annual contribution up to the indexed max ($5,500)
What is a traditional IRA?
400
According to ERISA each retirement plan participant must elect this to receive benefits at the time of the participant's death.
What is a beneficiary?
500
To avoid triple taxation according to this, an investment company must distribute at least 90% of its net investment income. Since WWF fund only distributed 85% of its net investment income, it must pay taxes on 100% of the net investment income. Shareholders always pay taxes on taxable income whether received in cash or reinvested.
What is IRC Subchapter M?
500
In a nonqualified, tax-deferred annuity; the money grows tax-deferred, and only the earnings are taxed at distribution. A computation known as this will determine how much of each retirement payment will be treated as a return of cost basis and how much as taxable ordinary income.
What is the exclusion ratio?
500
Contributions to this plan are after tax. Provides tax-free withdrawals provided the plan owner is at least 59 1/2
What is a Roth 401(k)?
500
A deferred compensation plan is an agreement between the employer and this.
What is the employee?
500
The employee Retirement Income Security Acto was established in this year.
What is 1974?
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