4/24/2023 Flashcards
IRA and Roth Max Contribution Limit
6,500k/yr
if older than 50:
7,500k/yr
When does IRA / Roth IRA withdrawl penalty go away
IRA:
59 1/2 years old
Roth:
59 1/2 years old
and
held account for 5+ years
How much is IRA and Roth IRA Early with drawl penalty
10% of what was taken out early
How much is the IRA and Roth penalty for not pulling out RMD’s when you were supposed to
10% of the amount that should have been taken out
Details on Contribution Limits on IRA and Roth if you have a company plan
Based on Income
79k/yr - Start’s to reduce the $ amount you can contribute every year
150k/yr - No more contributions allowed to IRA and Roth
RMD’s must be paid each year by what day
1st year:
April 1st of the following year
All other years
by December 31st of that year
what determines how much do you have to pay every year in RMD’s
Male and Female average life expectancy
Options for paying taxes on Inherited IRA and Roth IRA’s
If Spouse:
Lump Sum
Rollover into Your Account (must have same tax status -If IRA must still be IRA-)
10 Year Stretch
If Not a Spouse:
Lump Sum
10 Year Stretch
List all Company Retirement Plan Types
Defined Benefit Plan
Defined Contribution Plan
401k
403b
Deferred Compensation Plan
457
HSA
List all Self Employed Retirement Plans Types
SEP IRA
KEOGH
Defined Benefit Plan
Basically a Pension
Funded By Company
Company HAS to contribute every year whether they have the money to or not
Usually has a vesting Schedule - Longer With Company = higher the pension
Defined Contribution Plan
Think Profit Sharing
Funded By the Company and Employee can make contributions as well
Company Doesnt have to contribute
401k
Max Contribution Limit
27k /yr (excluding company match)
The company Can match up to
6% of employees’ annual salary
Can have a Roth Option
Which company retirement plans have Roth Options
401k
403b
How do Retirement Plans with Roth Options work when matching is involved
the match and employees funds are
Kept Seperate
Employee’s Contributions = After Tax $ => placed in a Roth 401k Account
Employers Contributions = Pre Tax $ => placed in 401k Account
403B
a 401k for Government Employees
(Federal State and Local)
has Matching
has Roth Option
ALSO has TSA option
TSA
Tax Sheltered Annuity
Offered as an option for with 403b plans
taking the funds and annuitizing them into a guaranteed income
Deferred Compensation Plan
Employees Saying they don’t need all the money they make so they go to HR and take a % of their income each paycheck and saving it for later in a Defined Compensation Plan
Non-Qualified Plans (Post Tax Contributions)
Usually only offered to employee’s who:
-have 5 yrs to retirment
or
-Have a really high income from work
(that they dont need all of right now)
If the Employer Company Goes under So does the Deffered Comp Plan
457
Deferred Compensation Plan for Government Employees
PAID IN PRE-TAX CONTRIBUTIONS (unlike private sector Deferred Comp Plans)
Not just for people 5yrs to retirement or high-wage earners. Any government employee can start one on day 1 of employment
SEP IRA/KEOGH
IRA for Self-Employed Individuals and Small Businesses
No Roth Option
Has Safe Harbor:
means the % you add to your plan you also have to contribute the SAME % (not $) to employees plans
Max Contribution:
25% Annual Salary
up to 57k/yr
HSA
Health Savings Account
Pre Tax Contributions
Tax Free Withdrawls (if used for Healthcare Expenses)
Set up through your Employer
Contributions DO NOT have to be spent all in the same year
(Those are FSA’s flexible spending accounts)
You tell your employer you are going to save X amount into HSA then they add that amount to the account at the beginning of the year then take % of your wage to pay themselves back throughout the year
All Types of Education Plans
529 Plans
Coverdell IRA
529 Plan
OWNED BY STUDENT
No Limit on contributions
BUT
Individuals are only allowed to contribute $15k/yr each
Married $30k/yr
(you can have an unlimited amount of people contributing 15k/yr)
has 5 year front end load option
(contribute 5 years worth all up front then not contribute any more for 5 years)
Contributions: AFTER TAX Dollars
Withdrawals are Tax Free
(Growth is not Taxed)
Must be used on Educational Expenses
VERY STRICT on that
Only Allows:
-Tuition
-Room and Board
-Laptop
Can Transfer Ownership to Family Members 1 Step Removed
(Cousins, Aunts, Uncles, etc…)
No Age Limit
Coverdell ESA
NOT OWNED BY STUDENT
but student is beneficiary
Max Contribution
2k/yr per Student
Contributions: After-Tax Dollars
Withdrawals are Tax Free
(Growth is not Taxed)
No contributions allowed after the Student is 18 years old
Student Age 30: anything left gets charged 10% penalty per year
Must be used on Educational Expenses
NOT as strict as 529 plans
Can Transfer Ownership to Family Members 1 Step Removed
(Cousins, Aunts, Uncles, etc…)
UTMA
Uniform Transfer Minor Account
Owned by Minor
But requires a custodian
(a parent or legal guardian most likely)
Anyone can contribute to the plan
TAXED LIKE A NQ BROKERAGE ACCOUNT
(after-tax contributions, taxed every year on the earnings and gains of the accout)
Becomes the Minors at age 18-21
(depends upon states legal definition of adult)
No Age you have to be to take money out
CANNOT BE SPENT ON BASIC NECESITIES
IE: Clothes Food Shelter
because that’s the parent/ Guardians job to provide those things to the minor
To open a Trust what is needed
A copy of the Trust Document
(shows who the Grantor, beneficiary, etc.. are for the trust)
Do Trusts have their own tax ID # or NOT
Yes they do
because they do not pass taxes on to beneficiaries but instead pay the tax before hand
QDRO’s
Usually from a divorce
A document Order from a court saying how to handle assets
An Example of a QDRO
Child Support
TOD
Transfer on Death -
“Upon my death transfer all my assets to this person”
Giving Assets to People on Death
POD
Pay on Death -
“Upon my death pay this debt and pay these estate taxes”
Paying off Loan/Debt/Taxes on Death
If you are Selling in the market you want to
Sell to the Highest Bidder
If you are Buying in the Market you want to
Buy From the Lowest Ask Price
Market Order
Guarantees an execution
but not a price
Buy # Shares
Limit Order
Guarantees a Price
but not a Execution
If CMV is above or Below this Price then
Buy # Shares
STOP Order
Protects investor from being hurt if the market goes the other way
If CMV is Above/Below this Price then
Turn’s into a Market Order
STOP Limit Order
Protects investor from being hurt if the market goes the other way
If CMV is Above/Below this Price then
Turn’s into a Limit Order
When Does STOP Order Activate and Execute
Activates - On the First Trade that Meets STOP Criteria
Executes - On the order IMMEDIATELY AFTER the Activation order
When Does STOP Limit Order Activate and Execute
Activates - On the First Trade that Meets STOP Criteria
Executes - On the First Trade -AFTER THE ACTIVATION ORDER- that meets the Limit order criteria
Buy STOP protects against what/ Activates When
The Price going ABOVE a certain price
Sell STOP protects against what / Activates When
The Price going BELOW a certain price
Buy Limit Executes When
The Price going BELOW a certain price
Sell Limit Executes When
The Price going ABOVE a certain price
