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BofA > Individual Retirement Account > Flashcards

Individual Retirement Account Flashcards

1
Q

What is an IRA?

A
  • tax advantage way to save for retirement
  • clients can invest in CDs or money market IRA’s
  • only an individual can own an IRA
  • bank administers the IRA
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2
Q

How is IRA set-up?

A
  • IRA is the agreement to the terms and conditions of the retirement account such as contributions, investment options and distribution limits
  • different accounts used to fund IRA
  • ——– bank IRA could include CD’s or money market IRA
  • clients can have multiple IRA plans and multiple accounts within each IRA plan
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3
Q

Eligibility to contribute to a Tradional IRA?

A

Under 72 years old
Earned US income
Valid Tax ID #

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4
Q

Eligibility to contribute to Roth IRA?

A

No age limit
Earned US Income
Valid tax ID #

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5
Q

Tradional IRA contributions

A 
Earned income to contribute
$ limit to how much can be contributed each year
Contribution maybe tax deductible
Limits:
--- under 50 - $6,000
--- over 50 - $7,000
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6
Q

Roth IRA contributions

A

Eligibility to contribute based on tax filing status (single or married filed jointly) and income
$ limit to how much can be contributed each year
Contributions are not tax deductible
Limits (annually):
— under 50 - $6,000
— over 50 - $7,000

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7
Q

Traditional IRA Withdrawals

A

No tax penalty when client is over 59 1/2 years old

Distributions prior to 59 1/2 may result in a 10% tax penalty

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8
Q

Roth IRA withdrawals

A

Contributions (not earning) can be withdrawn tax free any time

Earning can be withdrawn if account has been held over 5 years and one of the following:

  • over 59 1/2 years old
  • funds used to buy first home
  • IRA holder is disabled or passes away

10% tax penalty may apply if earnings are withdrawn before 59 1/2 or account held less than 59 1/2 or account held less than 5 years

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9
Q

Required minimum distribution - Traditional IRA

A

Once Clients reach 72 years old, a required minimum distribution (RMD) must be withdrawn from the plan each year

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10
Q

Roth IRA required minimum distribution

A

NO RMD required

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11
Q

Traditional IRA

A

Clients can make pre-tax contributions, which means savings can grow tax-deferred (clients don’t pay taxes until they make a distribution)

Contributions can be tax deductible

No penalty for withdrawal until age after 59 1/2

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12
Q

Roth IRA

A

Contributions on after tax basis

Withdrawals are tax-free if:

  • account has been held for over 5 years
  • owner is 59 1/2
  • —– funds are used toward first time home purchases
  • —– IRA holder is disabled or dies
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13
Q

Merrill IRA

A

Merrill offers investment IRA where you can invest in non - FDIC - insured investment products

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14
Q

CD IRA

A

Retirement savings plan where all the money is invested into CDs
Offers clients a secure way to invest $ at a fixed rate, offering predictability to plan for retirement

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15
Q

Money Market IRA

A

Savings account with tax advantages of an IRA

Good for clients who wan to deposit and withdraw at any time combined with secure savings option

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16
Q

401(K) rollover

A

Some clients neglect to manage 401K with former employer

Bank of America can facilitate a rollover from 401K to IRA

17
Q

Money Market IRA Features

A

Low opening balance of $100
Deposits accepted any time
Ability to set up automatic deposits (weekly and monthly)
Earns current money market deposit account rate

18
Q

Money Market IRA is good for what type of clients?

A

Low opening balance requirement makes money Market IRA a great option for customers just beginning to put $ away for retirement. Good for customers who want to move their funds around or customers retired and wants access to their funds more quickly

19
Q

IRA Certificate of Deposit Features

A 
Open fixed term, featured and variable rate CD IRA
Opening minimum balance:
- $100 variable rate CD IRA
- $1,000 fixed term IRA
- $2,000 featured IRA
renews automatically
Guaranteed rate (except for variable rate CD IRA)
20
Q

IRA CD is good for what types of client?

A
  • Good option for customers needed to lock $ for a period of time
  • appeal to clients looking for higher rTe of return and peace of mind knowing return is guaranteed through the term of the IRA CD
21
Q

Direct Rollovers

A
  • Funds come from qualified plan or another IRA
  • Qualified plan makes check payable to the new financial institution
  • Job change, retirement, separation from service or plan termination
22
Q

Indirect Rollover

A

Funds come from qualified plan or another IRA
Check made payable to customer
60-Day Rollover rule:
– check must be deposited into IRA within 60 days to avoid taxes and IRS penalties
If withheld amount is not deposited into IRA tax penalties will occur along with a possible 10% additional tax

23
Q

Trustee-to-trustee Transfer

A

One custodian (financial institution) to the other
Funds come from another IRA
Check made payable to new institution
Usually occurs because of dissatisfaction or looking for additional value

24
Q

The featured CD account is designed for clients with what type of needs and preferences?

A

Automatic renewal
Capital preservation: preserving money
Guaranteed returns

25
Q

Which one of the following features applies to the Featured CD?

  • it offers the shortest possible form
  • it offers a predictable return
A

It offers a predictable return

26
Q

What is the term for a featured CD account?

A

7-37 months

27
Q

What is the minimum amount required to open a Featured CD?

A

$10,000

28
Q

What is the minimum amount required to open a Standard Term (28 days to 10 years) account?

A

$1,000

29
Q

What is the term for a Standard Term CD account, with a $5,000 opening deposit?

A

7-37 months

30
Q

The Standard Term CD account is designed for clients with which of the following needs or preferences?

A

Stability
Earn more than what’s in a savings account
Don’t need money right away

31
Q

Which one of the following benefits applies to the Standard Term CD account?

Flexible term based on the time period that best meets need

Additional deposits can be made prior to maturity

A

Flexible term based on the time period that best meets need

Cannot make contributions

32
Q

The featured CD IRA is designed for client with which of the following needs or preferences?

A client who wants a flexible savings plan with the highest interest rate

A client who wants a guaranteed return for the term with automatic renewal

A

A client who wants a guaranteed return for the term with automatic renewal

33
Q

The money Market IRA is designed for clients with which of the following needs or preferences?

A

A client who wants the tax advantage of an IRA with the ability to add funds to the account

34
Q

What is the minimum amount required to open a Standard Term CD IRA?

A

Featured - $2,000
Fixed - $1,000
Money Market - $100

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