A DEFINED BENEFIT PLAN is a:
pension plan in which the benefit is determined based on the participant's current compensation
DEFINED CONTRIBUTION PLANS allow employers and employees to:
establish retirement savings accounts for each individual employee
PROFIT-SHARING PLANS allow companies to:
establish an employee retirement plan with the flexibility to vary the contributions according to the profitability of the company
The nonprofit organizations allowed to have 403 (B) PLANS include:
- Public schools
- Colleges and universities
- Churches and public hospitals
- 501(c)(3) charities
The investments allowed with a 403(b) plan are limited to low-risk investments, as per ERISA, including:
- variable annuities
- Mutual funds
Keogh plans _____ be established for self-employed individuals as a retirement plan.
- The maximum deductible contribution that can be made per employee is $51,000 per year or 25% of earned income, whichever is less.
The following investments are allowed in IRA accounts:
- Mutual funds
- Covered calls
- Gold and silver coins minted in the U.S. or by U.S. states
- High quality gold, silver, platinum, and palladium bullion
The following investments are not allowed in IRA accounts:
- Short stock
- Long stock purchased on margin
- Short puts
- Real estate
- Certain collectibles (works of art, rugs, antiques, metals, gems, stamps, foreign
- coins, and alcoholic beverages)
A ___% penalty is charged for any overpayment into an IRA, and the amount of overpayment will be taxed every year until it is withdrawn
define COVERDELL EDUCATION SAVINGS PLAN:
- Total contributions can't more than $2,000 per year per child under age 18.
- The contribution amounts are not deductible
Investment Policy Statements (IPS) are required for all:
ERISA specifically requires that all private sector retirement plans establish and provide for fiduciaries who:
Control and manage the operation of the plan
ERISA protects employees of all “private sector” pension plans, such as:
- Defined benefit and defined contribution plans
- Keogh plans
- Profit-sharing plans
- 401(k) plans
- “ERISA Covered” 403(b) plans
ERISA does not cover:
- Plans by the federal government
- 403(b) plans *excp
- Municipalities with 457 plans
In retirement planning, an Investment advisers must first identify their client’s ________
- CAPITAL NEEDS REQUIREMENT
- This process determines the target amount of money that is needed and paid out in the future.
define a money purchase plan:
very similar to a profit-sharing plan; however,the employer is obligated to contribute annually to funding employee accounts, regardless of the company’s profits
Can stocks be purchased in a TSA (tax-Sheltered Annuity)plans?
Define SIMPLE 401k:
- allow employees to contribute up to $12,000 per year
- Employer MUST make a matching contribution up to 3% of each employee’s pay ornon-elective contribution of 2% of each eligible employee’s pay.
- All contributions are immediately 100% vested to the employee.
What is the maximum contribution that can be made in any one year to a 529 college savings plan without a single contributor incurring a gift tax?