Misc CFP Flashcards
Employer can self-fund certain benefits under a 501(c)(9) voluntary employees’ beneficiary association (VEBA). All may be funded.
I. Death benefits
II. Medical benefits
III. Unemployment benefits
IV. Retirement benefits
V. Deferred compensation benefits
What is the p/f risk if the correlation coeff. is .8?
It is less than the average risk of the stocks.
If the corr. coeff. was 1, it would be the average of the risk exactly
If asked which stock is less risky -
remember. CV = std dev ÷ Expected Return
Pick the CV that is lower for less risk
A single premium policy purchased after1988 is a MEC.
If current CV $50,000 - basis $30,000 = $20,000 gain.
Dividends in a MEC become taxable when borrowed or withdrawn. Joan’s gain is $20,000; $10,000 is her true basis in the policy. Dividends under a MEC are generally taxed.
Only the gain is subject to the 10% penalty in addition to tax at ordinary rates.
Joan purchased a single premium whole life insurance policy in 2005. She paid one $30,000 premium for the coverage. The policy’s death benefit is $100,000. Today, the contract is worth $50,000 represented by $40,000 guaranteed cash value and $10,000 of dividend cash value. If Joan takes out a policy loan of $30,000, which of the following is true?
Non Qualified plans are THE FOLLOWING 4
SEPs, SARSEP, SIMPLE, 403b
When NPVis zero,
the investment met the buyer’s required rate of return
SEC advisors with AUM at least $100 mill file annual update 90 days of fiscal year
REduce AMT payable by purchasing high yield corp bonds or purchasing PUBLIC purpose municipal bonds
The reason to calculate the time-weighted return rather than the dollar-weighted return is to evaluate the performance of the portfolio manager.
TIME WEIGHTED IS GEO MEAN
DOLLAR WEIGHTED IS IRR
Non-cancelable policies provide premium rates that are guaranteed not to increase in the future.
A loss from a non-publicly traded partnership is a passive loss. The loss is not deductible until the limited partner sells the interest or dies. A loss from an LLC in which the investor is an active participant is deductible up to basis.
Don’t claim unless you die or sell.
If Life Ins policy is sold to someone other than insured, there is transfer for value rule making it subject to fed tax to the extent it exceeds basis. no 3 yr rule
SCorp active participant K1 $$$ IS or IS NOT earned income b/c it is a distribution of profits.
IS NOT
Profitability projections should not be included in corporate annual reports (SEC says its misleading)
The CML (Capital Market Line) tells us The expected return on a fully diversified portfolio
If any portion of the trust income is, or may be, used to purchase insurance on the life of the grantor or grantor’s spouse, then the trust is a grantor trust.
Taxed to Grantor
Yes, the HSA can pay for qualified LTC premiums (age-based).
beta is a variable on the horizontal axis
Life insurance surrender gain above basis is always taxed as ordinary income.
You can still participate in HSA as long as you don’t enroll in Medicare A and B.
FSA true statements:
I. It may receive contributions from an eligible person.
II. Allowable contributions are not subject to FICA.
III. Allowed contributions are not included in income.
IV. Reimbursements from the health FSA used for expenses are not taxed IF qualified medical expenses
IRR is used for unequal cash flows
true of an existing Medical Savings Account (MSA)?
II. Contributions by the eligible individual are deductible even if that person does not itemize.
III. Employer contributions are not included in the eligible person’s income.
APL” Automatic Premium and grace period help keep policy in force
Medical preimums - hug and hug
Life ins deducted - hug and slug
Life ins non deduct - slug and hug
Group life plan (deducted by co.) - hug and slug
On first $50k on gropu kife plan (hug and hug. But if over, 1st 50k non tax, next 50k (add table 1 rate to w2 at end of year so you’re paying taxes on over $50k) - slug and hug for over 50k
Self employe, greater than 2% owners of S Corp..don’t write off health ins premiums on business level, but 100% deductible on 1040
BUT DOES NOT APPLY TO DISABILITY
FRINGE BENEFITS:
20% discount of services
Occasional OT, meal money
EE parking $315/mo
Education assistance $5250
Ordinary Dividends - are from REITs
think REIT-OR (realtor)
Offset margin interest - can only be done against:
ordinary income
cd interest
short term cap gains
*NOT LT cap gains or qual dividends
SE income ONLY includes:
-Net Sch C income
-Gen Partnership income (K-1)
-BOD fees
-PT earnings (1099)
How much can a person deduct of AGI for LT cap gain property donated to charity?
30%
*50% if they used basis (instead of FMV)
Time weighted return =
Real rate of return =
IRR internal rate of return =
Nominal rate of return =
=mgr performance
=measuer to inflation
=effect rturn considering cash flow
=fail to express investor’s return
VEBA
Disability benefits
child care benefits
legal expense ben
unemployment benn
medical
etc
but NOT what?
Deferred Comp
