QUALIFIED ACCOUNTS
What is a qualified account?
A qualified account is a retirement account that meets IRS requirements and offers tax advantages, such as tax deductions and tax-deferred growth
What are the 2 main types of IRAs?
Traditional IRAs & ROTH IRAs
What is simple interest?
when interest is made only of the principal
What is the definition of BONDS?
A form of debt
What is an annuity?
An agreement with an insurance company that provides regular payments over time, often used for retirement income.
What are the rules for qualified accounts?
1. 59 1/2 - Lack of liquidity
2. Taxes (Penalties, States, and Federal taxes)
What does IRA stand for?
Stands for Individual Retirement Account
What is compound interest?
Interest made of the principal + the interest. Money msking you money
What do ETF stand for?
Exchange Traded Funds
What is the difference between a fixed indexed annuity and a variable annuity?
A Fixed Indexed Annuity (FIA) provides guaranteed interest and payments, offering no risk.
A variable annuity allows investments in sub-accounts, meaning returns fluctuate based on market performance, making it higher risk.
What is the max contribution for 401ks?
$23,500
What is the max contribution for IRA & Roth IRAs
$7,000/ year and $8,000 over 50 years old
How do you explain Rule of 72?
Estimates how long it will take for compound interest to double your money
When were the baby boomers born?
1946-1964
If I have an annuity with a 10 year contract but I turn 73 in one year can I still have implment an annuity aws my solution? Why?
Yes, all annuities we work with are RMD friendly. The client will have access to their RMDs
What does TSP stand for?
Thrift Savings Plan
Which IRA is tax-free?
ROTH IRA
If you have $1,000 and in 6 years is $2,000 how much interest are you gaining?
12%
Name 3 types of qualified accounts?
401Ks, TSP, 457, 401(a)(b), 403(a)(b), Traditional IRA, SEP IRA
What is the main advantage of a tax-deferred annuity?
Earnings grow tax-deferred, meaning you don’t pay taxes on gains until you withdraw funds. This allows compounded growth over time, which can be beneficial for long-term savings.
Can you roll over a Traditional 401(k) into a Roth IRA? If so, what is the tax implication?
Yes, you can roll over a Traditional 401(k) into a Roth IRA, but it is considered a Roth conversion, meaning the amount rolled over is subject to ordinary income tax in the year of conversion.
What is the income limit for contributing to a Roth IRA in 2024?
Single filers: ~ $161,000.
Married filing jointly: ~ $240,000.
How long will it take to double $10K if you obtain 20% interest?
It will take 3.6 years to double to $20K
At what age are you required to start taking RMDs from most qualified accounts, and what happens if you don’t?
RMDs must begin at age 73. If you fail to take the required amount, the IRS may impose a 25% penalty on the amount not withdrawn.
What is the downside of an indexed annuity?
The downside is that while you get some market participation, returns are limited by caps, spreads, or participation rates, which can reduce long-term growth potential.