BUSINESS FINAL EXAM PT.2 Flashcards

1
Q

What is the Coverdell Education Savings Account (ESA) ?

A

education savings account is a trust that assists families with educational expenses.

It works like a Roth IRA, except contributions are limited to $2,000 annually per child under 18.

Earning are tax-free and no taxes on withdrawals to pay for education.

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2
Q

What is a single life annuity?

A

An payment plan that offers a retiree with a monthly payment for as long as he or she lives. When the annuity holder dies, the payments stop.

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3
Q

what is a Joint and survivor annuity?

A

is an insurance product designed primarily for retired couples who want a guaranteed monthly income that will continue for as long as either spouse lives.

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4
Q

What is a California Durable Power of an Attorney?

A

It is a document that authorizes your agent (a person you choose) to manage your financial affairs if you become unable (or unwilling) to manage them yourself.

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5
Q

What is a 12b-1 fee?

A

It is an annual marketing or distribution fee on a mutual fund

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6
Q

What is the tax treatment like for Annuity payments?

A

Annuity payouts are generally taxes as normal income.

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7
Q

how are social secruty benefits determined?

A

They are determined by number of years earnings, the average level of earning, and the adjustment for inflation.

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8
Q

What is an estate?

A

It is the economic valuation of all the investments, assets, and interests of an individual.

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9
Q

What are the specific cash needs of an estate?

A

medical costs, funeral expenses, legal fees, outstanding debt, estate and inheritance taxes.

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