Here are two key features of money market accounts with examples:
1. Relatively safe - They invest in high-quality, short-term securities issued by the government, large banks, and major corporations. This makes them among the safest investments.
2. Liquid investment - Money can be withdrawn at any time without penalty. Examples of underlying securities include certificates of deposit (CDs), US Treasury bills, and commercial paper.
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Quizshow taxplanning-120426000013-phpapp01
1. Quiz Show
Taxes & Retirement
Donna M. Kesot, CPCU
CPCU 556 Annuities
April 25, 2012
2. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust
3. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust
Charitable Remainder Trust
4. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust
Charitable Remainder Trust
Aka CRT
5. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust
Charitable Remainder Trust
Aka CRT
2 types:
6. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust
Charitable Remainder Trust
Aka CRT
2 types:
1. CRUT Charitable Remainder Unitrust(5-50% of each year’s
current value, up to 20 years)
7. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust
Charitable Remainder Trust
Aka CRT
2 types:
1. CRUT Charitable Remainder Unitrust(5-50% of each year’s
current value, up to 20 years)
2. CRAT Charitable Remainder Annuity Trust (5—50%, calculated
on the initial value of the property)
10. Contribution Base
Adjusted Gross Income without allowance for
net operating loss carryback.
Cash Contributions to public charities–50% of the contribution base
11. Contribution Base
Adjusted Gross Income without allowance for
net operating loss carryback.
Cash Contributions to public charities–50% of the contribution base
Long-Term Capital Gain Property—full value up to 30% of contribution
base, e.g. stocks/bonds, real estate
12. Contribution Base
Adjusted Gross Income without allowance for
net operating loss carryback.
Cash Contributions to public charities–50% of the contribution base
Long-Term Capital Gain Property—full value up to 30% of contribution
base, e.g. stocks/bonds, real estate
Private Foundations—full value up to 20% of contribution base
13. Contribution Base
Adjusted Gross Income without allowance for
net operating loss carryback.
Cash Contributions to public charities–50% of the contribution base
Long-Term Capital Gain Property—full value up to 30% of contribution
base, e.g. stocks/bonds, real estate
Private Foundations—full value up to 20% of contribution base
Short-Term Capital Gain Property-50% of the contribution base
14. Contribution Base
Adjusted Gross Income without allowance for
net operating loss carryback.
Cash Contributions to public charities–50% of the contribution base
Long-Term Capital Gain Property—full value up to 30% of contribution
base, e.g. stocks/bonds, real estate
Private Foundations—full value up to 20% of contribution base
Short-Term Capital Gain Property-50% of the contribution base
Tangible Personal Property- full fair market value up to 30% of
contribution base
15. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations
16. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations
17. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations
18. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations
19. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations
20. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations
21. TRUE or FALSE?
These plans allow individuals to invest pre-tax and
provide tax-deferred earnings
22. TRUE or FALSE?
These plans allow individuals to invest pre-tax and
provide tax-deferred earnings
23. A 403(B) is a qualified retirement plan that for
employees of local, state, or federal governments
and agencies.
24. A 403(B) is a qualified retirement plan that for
employees of local, state, or federal governments
and agencies.
TRUE or FALSE?
25. A 403(B) is a qualified retirement plan that for
employees of local, state, or federal governments
and agencies.
FALSE
26. A 403(B) is a qualified retirement plan that for
employees of local, state, or federal governments
and agencies.
FALSE
Real Answer:
A 403(b) PLAN IS A TAX FAVORED RETIREMENT PLAN FOR
EMPLOYEES OR CERTAIN NONPROFIT ORGANIZATIONS
28. Tax Avoidance Strategies(3):
Step Up in Basis at Death
Gifts to charity
Use of exclusion provisions in the tax law, e.g. sale of primary home,
corp exclusion of up to 50% gain on QUALIFIED small business stock from
start up
30. Retirement Income Sources
• Individually Provided (IRAs, cash values of Life ins, nonqualified annuities,
savings)
• Social Security – guaranteed income floor, available at age 62
Retired Worker’s Benefits - equal to worker’s primary insurance
amount (PIA) at age 65-67.
Spouse of Retired Worker (50% of retired worker’s PIA)
COLA tied to CPI
• Employer-Provided Retirement Plans
Qualified pension plans
Profit-sharing plans
Savings Plans
32. Tax Deferral Strategies(3):
Like Kind Exchanges
Tax free corporate reorganizations
Equity Collars with monetizing the hedged stock, e.g. puts on hedged
stocks from employee stock options (other examples p. 294)
Exchange Funds
33. Qualified Retirement Plans
A. Pension Plans, Profit Sharing Plans, Savings/Thrift Plans, HR-10
B. Stock bonus plans, Employee Stock Ownership Plans (ESOP), Keogh Plans
C. Nonqualified Annuity
D. A & B only
E. A, B & C
34. Qualified Retirement Plans
A. Pension Plans, Profit Sharing Plans, Savings/Thrift Plans, HR-10
B.
C. Nonqualified Annuity
D. A & B only
E. A, B & C
39. Qualified Retirement Plans
A.
B.
C.
D.
E.
Right Answer: Qualified Retirement Plans are spelled out in 401 (k). Correct answer (d) A& B. Pension
Plans, Profit Sharing Plans, Savings/Thrift Plans, Stock bonus plans, Employee Stock Ownership Plans (ESOP),
Keogh Plans
40. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
41. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
42. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
43. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline
44. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline
2. Certain work related expenses may end or reduce
45. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline
2. Certain work related expenses may end or reduce
3. Home-ownership expenses may decline if mortgage debt is
eliminated
46. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline
2. Certain work related expenses may end or reduce
3. Home-ownership expenses may decline if mortgage debt is
eliminated
4. Support for dependent children may have ended
47. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline
2. Certain work related expenses may end or reduce
3. Home-ownership expenses may decline if mortgage debt is
eliminated
4. Support for dependent children may have ended
5. Senior discounts (Go AARP)
48. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline
2. Certain work related expenses may end or reduce
3. Home-ownership expenses may decline if mortgage debt is
eliminated
4. Support for dependent children may have ended
5. Senior discounts (Go AARP)
6. General expenses may decline as the aging individual
become less active/more sedentary
50. The parties to an annuity?
Insurer, Contract Owner & Annuitant
51. The parties to an annuity?
Insurer, Contract Owner & Annuitant
•Insurer
•Contract Owner: the party who purchases the annuity from the
insurer and who makes premium payments. May be the annuitant.
•Annuitant: the person insured under the annuity
58. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation
59. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation
60. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation
61. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation
62. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation
63. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation
64. Nonforfeitable right to his/her account balance under a defined-
contribution plan or to an accrued benefit under a defined=benefit
plan that results for employer contributions to the plan
65. Nonforfeitable right to his/her account balance under a defined-
contribution plan or to an accrued benefit under a defined=benefit
plan that results for employer contributions to the plan
Vesting
66. Nonforfeitable right to his/her account balance under a defined-
contribution plan or to an accrued benefit under a defined=benefit
plan that results for employer contributions to the plan
Vesting
69. Qualified Annuity
• An annuity that is used as a funding vehicle in a
qualified plan, such as an individual retirement
account, a tax-sheltered annuity, or a 401(k)
plan.
• 10% tax penalty for early withdrawal (age 70.5)
70. A Qualified 401(k) plan meets the IRS rules in
section 401(k) & participants may choose to
TRUE or FALSE?
71. A Qualified 401(k) plan meets the IRS rules in
section 401(k) & participants may choose to
TRUE or FALSE?
72. Highly secure, liquid investment that investors commonly use for the
liquid portion of their investment portfolios
73. Highly secure, liquid investment that investors commonly use for the
liquid portion of their investment portfolios
Money Market Mutual Fund
74. Highly secure, liquid investment that investors commonly use for the
liquid portion of their investment portfolios
Money Market Mutual Fund
76. 2 features & examples for
Money Market Account
Relatively safe
Liquid investment
Such as securities issued or guaranteed by the federal
government, certificates of deposit, banker’s acceptances, euro
dollars, and commercial paper