Other Investment Vehicles

Question 1

529 Plan

Answer 1

Allows money to be saved to be used for qualified expenses for K-12 and post-secondary education. K-12 up to $10K a year. Defined as a municipal fund security.

Question 2

Types of 529 plans

Answer 2

Prepaid tuition:

Savings plans

Question 3

Local government investment pools

Answer 3

LGIPs, established by states to provide other government entities with a short term investment vehicle to invest funds. Generally formed as a trust in which municipalities can purchase shares or units in the LGIPs investment portfolio; not required to register with SEC. No prospectus, but yes on disclosure documents.

Question 4

Achieving a Better Life Experience accounts

Answer 4

ABLE: tax-advantage savings accounts for individuals with disabilities and their families. ABLE act of 2014. Beneficiary of the account is the owner and the income earned is not taxed. Disability onset under the age of 26. Contributions must be made after tax.

Question 5

Partnership

Answer 5

Unincorporated association of two or more individuals.

Question 6

Types of partnerships

Answer 6

General partnerships

Limited partnerships

Question 7

General partnership

Answer 7

all partners have responsibility to manage; ownership may be unequal; no liability protection. Tax reporting entity but not a tax paying entity. Owners pay any taxes

Question 8

Direct participation programs

Answer 8

DPPs raise money to invest in real estate, oil and gas, equipment leasing, and other similar business ventures. Income or losses are passed directly through to the owners of the partnership/investors. No secondary market, highly illiquid.

Question 9

Limited Partnerships

Answer 9

Type of DPP. Two types of partners: the general partner and the limited partner. LPs must have at least one of each. Property usually held in the form of a tenants in common.

Question 10

General partners

Answer 10

Have unlimited liability, manage all aspects of the partnership, fiduciary responsibility, they are compensated for fulfilling their duties. May not compete, borrow money, or commingle partnership funds with personal assets

Question 11

Limited partners

Answer 11

Limited liability, can’t lose more than they invested; no business management responsibilities, right to vote on overall business objectives; right to cash distributions, capital gains, and tax deductions. Right to inspect all books and records.

Question 12

Limited partnership dissolution order

Answer 12

secured lenders
other creditors
limited partners, first for claims to shares of profits then claims to a return of contributed capital
General partners