Ch. 14: Customer Accounts Flashcards
Anyone with ________ income may contribute to an IRA.
Earned
The ________________ Agreement describes the customer’s pledging of securities as collateral to the BD.
Hypothecation Agreement
Hank, age 71, has a Roth IRA. What penalty is assessed for his failure to begin distributions?
There is no penalty since Roth IRAs do not have a required minimum distribution.
True or False: Regardless of income level, a contribution is always permitted in any type of IRA.
False. High income individuals may lose the ability to contribute to Roth IRAs, but may contribute to Traditional IRAs.
What is waived for a first-time homebuyer in the event of an IRA distribution?
The penalty is waived, however, taxes are still levied.
RRs must examine what document to open any corporate account?
Corporate Resolution
The maximum contribution to an IRA is the lesser of $_______ or ____% of earned income.
The maximum contribution to an IRA is the lesser of $6,000 or 100% of earned income.
Define Regulation T.
The percentage a customer must deposit when purchasing securities or selling short
What are the general characteristics of a traditional IRA account?
It is an individual retirement account in which the money grows tax-deferred.
True or False: IRA trustee-to-trustee transfers are tax-free.
True
May a cash account be opened without the customer’s signature?
Yes
Describe the employees who must be eligible to contribute to an ERISA qualified plan.
Employees who are 21 years or older with one year of full-time service
Only one rollover is allowed per rolling ____ months.
12 months
Must the custodian in an UGMA account be a parent?
No. Any adult may be custodian.
True or False: In a 401(k) plan, employers must make matching contributions on behalf of employees.
False. Employers may, but are not required to, make matching contributions.
Who may enter orders in a joint account?
Any owner named on the account
True or False: Only one person must provide information to open a joint account.
False. Each owner must provide information to open a joint account.
A contribution of $_______ can be made to a Spousal IRA for a non-working spouse.
$6,000
What is investment discretion?
An agreement where someone other than the owner is authorized to determine the securities to be purchased or sold
True or False: Custodial accounts are solely carried in the name of the minor.
False. The account is in the custodian’s name for the benefit of the minor.
A 401(k) plan uses _________ contributions and the growth of the account is _______________.
Pre-tax contributions and growth is tax-deferred
What is the maximum annual contribution to a 401(k)?
$19,000
What is needed to exercise discretion over a client’s account?
Written power of attorney
May an 85-year-old continue to contribute to a Roth IRA?
Yes, provided she has earned income