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Series 65 > Investment Recommendations > Flashcards

Investment Recommendations Flashcards

1
Q

Three types of clients are _____, _____ and ______

A

personal, institutional, and fiduciary

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2
Q

TOD allows your assets to be transferred upon death to a ______ without going through _______

A

transferred to a named bene without going through probate

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3
Q

Another small bank version of TOD accounts is the _______ (not really a trust), which are ______

A

Totten Trust (don’t need a trust document), but they are revocable by the depositor at any time

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4
Q

Family LPs are used for ______ purposes where the parents are typically the ______

A

estate planning purposes where the parents are the GPs

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5
Q

Assets contributed to a family LP are ______ since they are less liquid inside the LP

A

discounted

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6
Q

Does a sole proprietorship require any filing with the state?

A

NO - no state charter is required

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7
Q

SPs do not pay _____ bur rather ____

A

do not pay corporate income tax, just personal income tax

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8
Q

SPs have ______ liability

A

unlimited

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9
Q

GPs are formed under a general partnership ______; some states require that the agreement be ______

A

GP agreement; some states require that it be filed

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10
Q

An LP has _____ investors and is also known as ______ programs

A

have passive investors (also known as direct participation programs)

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11
Q

A C Corp is a ______ entity

A

taxable

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12
Q

A copy of the _______ is required to open a C Corp account

A

copy of the corporate charter

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13
Q

A copy of the ______ is needed to open an LP account

A

certificate of limited partnership

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14
Q

A corporation that has _____ or less is considered an ______ for tax purposes

A

100 shareholders or less is considered an S Corp

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15
Q

LLCs give the tax benefits of _____ without the restriction on # of ______

A

tax benefits of S Corps without the restriction of # of investors

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16
Q

The Settlor of the trust is also known as the _____ or the _____

A

grantor or the Trustor

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17
Q

The trustee is the _____ of the assets in the trust

A

manager

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18
Q

The legal list is a set of _____ that the trustee can invest in under the prudent man rule

A

securities

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19
Q

Trusts that are set up during one’s lifetime are called _______

A

inter-vivos (revocable or non-revocable)

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20
Q

Trusts that are set up at your death according to your will are called ______

A

testamentary trusts (non-revocable)

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21
Q

In a revocable trust, the grantor retains _____ over the assets in the trust (and can remove them)

A

control

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22
Q

Income in a revocable trust is taxed at ______ to the _____

A

personal income levels to the grantor

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23
Q

For non-revocable trusts, any income in the trust is taxed to the _____ at _____ rates

A

taxed to the trust at trust rates

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24
Q

To open an estate account, you must have a copy of the ____, the ______, and the _____

A

death certificate, copy of the last will and testament, and the inheritance tax waivers

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25
Q

The five tax filing statuses are:

A
  • single
  • head of household
  • qualifying widow(er) with dependent children
  • married filing jointly
  • married filing separately
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26
Q

If unmarried, choosing ____ or _____ status will result in a lower tax bill

A

head of household or widow(er) status

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27
Q

To qualify for widow(er) status, spouse must have died within last _____

A

2 years

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28
Q

A “capital needs” analysis is used to determine how much ______ in needed

A

life insurance

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29
Q

If life insurance is owned by an irrevocable trust or by another person, it is ______ from the decedent’s (deceased’s) gross estate

A

excluded

30
Q

Transfer payments (alimony, pension, social security) received by retired individuals are NOT considered _____

A

earned income

31
Q

The first ______ of capital gain from the sale of a personal residence is excluded from tax

A

$250k

32
Q

To qualify for the capital gain tax credit on home sale, the residence must have been lived in by the owners for at least ______ of the last ____ years

A

2 of the last 5 years

33
Q

Inherited securities are transferred with a cost basis set at ______

A

date of death

34
Q

An executor can deduct the following from an estate to bring down the overall total:

A
  • funeral expenses
  • admin expenses
  • legal fees
  • unpaid bills / claims against the estate
  • mortgages against estate-owned property
  • assets donated to charity
  • estate liability tax
35
Q

For estate tax purposes, any securities are valued as of ______, and if any tax is due, payment must be made by _____ after the date of death

A

valued as of date of death; any payments are due by 9 months after date of deat

36
Q

Deductions that are NOT allowed against the AMT calculation are:

A
  • personal exemption
  • standard deduction
  • state and local deduction
  • misc deductions, such as tax preferences
37
Q

A family LP must have a ______

A

legitimate business reason (not just to avoid taxes)

38
Q

Self-dealing by a trustee is ______

A

fraudulent

39
Q

Income excluded from the definition of Adjusted Gross Income are ______ bond interest and retirement plan distribution amounts from _____ plans attributable to the _____

A

muni bond interest and distributions from non-qualified plans attributable to the cost basis

40
Q

A form _____ must be filed for reporting trust taxes

A

form 1041

41
Q

“Micro-cap” is any company with less than ____ in market cap

A

$300m

42
Q

Small cap is between ___ and ____ market cap

A

$300m to $1,000m

43
Q

Mid cap is between ____ and ____ market cap

A

$1,000m and $5,000m

44
Q

Large cap is above _____ market cap

A

$5,000

45
Q

The Value Line Index is mainly a ____ cap index

A

large cap

46
Q

The Wilshire Index is all _____

A

listed companies

47
Q

The Russell 2000 is a ___ cap index

A

small cap

48
Q

EAFE Index is for ______

A

Europe, Australia, and the Far East

49
Q

Typical to fund bond portfolios between ___ and ___ months; equity portfolios between ___ and ___

A

3 and 9 months for bonds; 12-24 months for equities

50
Q

If rebalancing more than annually, considered ____

A

active

51
Q

A QDRO is used when a legal _____ happens between two people with claims on a retirement account

A

legal separation (as in a divorce)

52
Q

If a plan sponsor complies with rule 404(c), then they are not accountable for poor _____

A

investment decisions made by the plan participants

53
Q

Is there a penalty for premature withdrawals from 457 plans?

A

NO

54
Q

A “top-heavy” plan is one that favors _____

A

highly paid employees (non-qualified)

55
Q

Money purchase retirement plans are a type of _______ plans

A

defined contribution

56
Q

PBGC covers _____ and _____ plans

A

defined benefit and corporate pension plans (NOT defined contribution plans)

57
Q

Expenses that exempt you from the 10% premature withdrawal penalty are:

A
  • unreimbursed medical expenses (above 7.5% of gross income
  • disability
  • death
  • higher education expenses
  • medical insurance (if unemployed)
  • first time home (up to $10,000)
  • rollover into another plan
58
Q

The only time that losses can be deducted on losses within an IRA is if the IRA is _____

A

liquidated and terminated

59
Q

A safe harbor 401(k) relieves the employer of having to perform annual ____ to show that the plan does not favor highly compensated employees

A

annual benefits testing

60
Q

To get “safe harbor” status, the employer must agree to matching contributions of either ____ of salary of participating employees or ____ of all eligible employee salaries. Employer-paid benefits must ____ vest _____

A

4% of participating employees, 3% of all eligible employees; 100% vest immediately

61
Q

Employees can contribute to a 403(b) plan by electing how much of their salary they want to ______, up to a limit of _____ in 2016

A

want to defer, up to $18k limit in 2016

62
Q

Permitted investments for 403(b) plans are:

A
  • life insurance
  • variable / fixed annuities
  • mutual funds
63
Q

Early withdrawals prior to age 59.5 from a 403(b) plan are exempt from the 10% penalty tax if the employee has ______

A

terminated their employment after age 55 and takes distributions based on life expectancy

64
Q

457 plans are _______

A

non-qualified

65
Q

457 permit withdrawals ______ without a _____

A

allow withdrawals at any time without a penalty tax (regular income tax is still due)

66
Q

529 rollovers are permitted every _____ without any tax penalty

A

12 months

67
Q

Fixed UITs can be traded on the _____ market

A

OTC

68
Q

The “settlor” of an ERISA plan is responsible for:

A
  • choosing type of plan
  • amending the plan or changing plan options
  • requiring employee contributions
  • terminating a plan
69
Q

Is there a requirement for the trustee of a trust to get beneficiary approval prior to delegating investment management functions to an agent?

A

NO

70
Q

An index fund manager is expected to generate a return that _______ the benchmark index’s performance

A

exceeds (weird, but they have to cover the cost of running the fund)

71
Q

What takes precedence - the prudent man rule or the provisions of the trust?

A

PROVISIONS of the trust - even if they seem stupid

Series 65 (10 decks)

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