Section 2

Question 1

A major drawback of deferred compensation plans is that prior to actual pay-out of the compensation the company could go into bankruptcy or otherwise fail, leaving the employee as a general creditor who may not ever be paid.

Answer 1

True

Question 2

Which two of the following are true about the tax implications of variable life insurance:

Answer 2

I. Upon death, the proceeds are included in the value of the insured’s estate
Death benefits payable to a beneficiary are not taxable

Question 3

The Securities Act of 1933 Disclosure Requirements are designed to provide investors with:

Answer 3

A factual basis for judging the fairness of the new securities offerings

Question 4

Normally, Keogh and Traditional IRA plan distributions may begin without penalty at what minimum age:

Answer 4

59 1/2

Question 5

On an unsolicited trade, when is the latest time a prospectus can be delivered:

Answer 5

With the confirmation

Question 6

Which of the following is true about a mutual fund prospectus:

Answer 6

It is part of the SEC registration statement

Question 7

Tax Sheltered Annuities (TSA) under IRC Section 403 (b), Basic Features

Answer 7

Employee contributions are made in before-tax dollars
Employees have a zero cost basis
TSAs are subject to IRS early withdrawal penalties prior to age 59 1/2

Question 8

An employer who maintains a Keogh plan must also make contributions for which of the following individuals:

Answer 8

Full-time employees only with more than one year of service

Question 9

Violations of the Securities Act of 1933 would include:

Answer 9

Disclosing in the preliminary prospectus the pricing formula for the investment company shares

Question 10

A Keogh or Traditional IRA plan distribution must begin by no later than what age:

Answer 10

70 1/2

Question 11

Which party is responsible for paying the federal income taxes due on earnings generated by the tax-qualified variable annuity separate account dividends, interest and capital gains during the accumulation period:

Answer 11

No taxes are due on the separate account earnings during the accumulation period

Question 12

Which of the following must register as an Investment Advisor

Answer 12

A person selling research reports for a fee

Question 13

Which two of the following are true about 529 college savings plans:

Answer 13

Contributions are not tax deductible, but earnings are tax deferred
Qualified distributions are tax free

Question 14

The maximum annual deductible contribution to a Roth IRA is:

Answer 14

Zero

Question 15

All of the following are true regarding Coverdell ESAs, EXCEPT:

Answer 15

Contributors must have earned income

Question 16

Which of the following would be considered a “security” under the federal securities laws:

Answer 16

I. Money market funds
II. Municipal bond unit investment trust
III. Real estate limited partnerships
IV. Variable annuity contracts