Terms 115-136

Question 1

12b-1 mutual Fund

Answer 1

Fund that passes charges of advertising fees on to investors to solicit new business into the funds

Question 2

Annuity

Answer 2

Insurance contract between an investor and an insurance company that guarantees a fixed or variable rate of return to the holder

Question 3

Fixed annuity

Answer 3

Insurance contract that pays annuitant fixed rate of return

Question 4

Variable Annuity

Answer 4

Insurance contract that does not guarantee foxed rate of return

Question 5

Accumulation Units

Answer 5

Determined value of the annuitant’s holdings in the separate account

Question 6

Life Annuity

Answer 6

Pay-out option on an annuity that pays annuitant for life and ceases at death

Question 7

Life with period certain

Answer 7

Pay-out option that pays annuitant for life but continues to pay beneficiary if the annuitant dies before the end of the period

Question 8

Unit Refund Annuity

Answer 8

Pay-out option that continues to pay the beneficiary if the annuitant dies before the full value of the annuity is reached.

Question 9

ERISA

Answer 9

Employee Retirement Income Security Act of 1973 protects the right of workers to have qualified retirement plans

Question 10

IRA

Answer 10

Individual Retirement Account; $3000 maximum tax-deductible individua contribution; $3500 over age 50.

Question 11

IRA Rollover

Answer 11

Moving funds from one IRA to another; must be completed within 60 days to avoid taxes and penalties

Question 12

Keogh Plan

Answer 12

Retirement account for self-employed individuals. Maximum contribution is the lesser of 25% of earned income of $40,000

Question 13

Defined contribution

Answer 13

Contributions to a qualified plan paid by a percentage or formula

Question 14

Defined Benefit Plan

Answer 14

Qualified pension plan in which the employer is required to fund a specific retirement benefit to employees

Question 15

Money Repurchase Plan

Answer 15

Based on a percentage of salary applied toward a pension

Question 16

Tax-deferred Plan

Answer 16

Taxes are paid only on distributions; such as 401K or 403B

Question 17

403B plan

Answer 17

Tax-deferred plan for non-profit organizations such as hospitals and schools

Question 18

Passive Income

Answer 18

Income derived from real estate ventures and limited partnerships that passes on to personal taxes

Question 19

Progressive Tax

Answer 19

An increasing tax varied for income levels; such as the IRS income tax.

Question 20

Regressive Tax

Answer 20

Flat tax rate such as sales tax

Question 21

Capital Gain

Answer 21

Money earned on the sale of a security above the original cost basis.