Alternate Sources of Funding

Question 1

alternate sources of funding (6)

Answer 1

outside investment
home equity
whole life insurance
deffered compensation arrangement
EE stock purchase plan
ee/executive stock option

Question 2

Outside investments

Answer 2

a post tax contribution, have to pay income tax on dividends, and capital gains on investments that appreciate before sale

Question 3

home equity

Answer 3

refinance home and take cash out/ reverse mortgage

Question 4

whole life insurance

Answer 4

can surrender the policy to get some of the cash value to pay premiums and reduce coverage

Question 5

Deffered compensation arrangement

Answer 5

intended to increase wage replacement ratio for higher earners and it supplements their qualified plan

taxable income is deferred to a future date when an executive ho[pes their marginal tax rate is lower

Question 6

deffered compensation arrangement only allowed if ER

Answer 6

has no constructive receipt and has a significant risk of forfeiture

Question 7

EE stock purchase plan

Answer 7

allows EEs to purchase company stock at a discount (15-25%)

Question 8

EE/Executive stock option

Answer 8

stock issued as call option, if stock increases 30% between award and exercise EE benefits