Unit 5 Other Investment Vehicles Flashcards
This is a specific type of education savings account available to investors. This allows money saved to be used for qualified expenses for K-12 and post secondary education.
529 plan
You can only contribution to a 529 plan up to _____ a year.
$10,000
A 529 plan is a ___ ____ security.
Municipal fund
Prepaid tuition plans are used for which type of residents?
State residents
Savings plans are used for which type of residents?
Residents and non residents
This type of plan allows resident donors to lock in current tuition rates by paying now for future education costs.
Prepaid plans
This type of plans allows donors to save money to be used later for education expenses.
Savings plan
Does he donor of a 529 plan need to be related to the student?
No
Can a donor contribute to her own 529 plan?
Yes
With a 529 plan, a donor can invest a ___ ___ or make ___ ____.
Lump sum or make periodic payments
What is included in qualified education expenses?
Tuition, room and board, books
Withdrawals for nonqualified expenses will be subject to ____ and a ___ ___ ____.
Taxes and a 10% penalty.
Contributions are considered to be what within 529 plans?
Gifts
Contributions are made with ___ ____ dollars, and earnings accumulate on a ___ ____ ____.
- After tax dollars
2. Tax deferred basis
Withdrawals from 529 plans are ____ _____ at the federal level.
Tax free
Most states permit tax free withdrawals as long as the donor has opened an ___ ___ plan.
In state plan
Is there tax consequences if a beneficiary does not need the funds and the donor changes the beneficiary?
No
True or False: If the donor changes the beneficiary of the plan, it must be to a family member of the original beneficiary.
True
Overall contribution levels within 529 plans can vary from ___ to ____.
State to state
Who’s control does the assets within a 529 plan belong to?
The donors
There are no ___ ____ on making contributions to a 529 plan.
Income limitations
A 529 plan allows for ____ payments if desired.
Monthly
Rollovers can occur for 529 plans how often?
Once every 12 months
List the following for a Savings Plan:
- Inflation Hedge
- Outpace Inflation
- School/System
- Maybe, depends on performance
- Maybe, depends on performance
- Any
List the following for a Prepaid Plan:
- Inflation Hedge
- Outpace Inflation
- School/System
- Yes
- No
- Specific
This provides other government entities, such as cities, counties, school districts, or other state agencies, with a short term investment vehicle to invest funds.
Local government investment pools (LGIP)
This is usually formed as a trust in which municipalities can purchase shares or units in the investment portfolio.
LGIP
LGIPs are not a ___ ___ fund.
Money Market
An LGIP may be permitted to maintain a fixed ____ ____.
$1 NAV
LGIPs are not required to registere with the ____
SEC
LGIPS fall within ____ ____.
Government exemption
Guidelines for LGIPs are vary from ___ to ____.
State to state
There is no ____ with LGIPs.
Prospectus
LGIPs do have ____ ____ which include statements, investment policy and operating procedures. Also, management fees.
Disclosure documents
These are tax deferred savings accounts for individuals with disabilities and their families.
ABLE accounts
Who is the account owner for an ABLE account?
The beneficiary
Income earned by an ABLE account is ___ ___.
Not taxed
The ABLE act limits eligibility to individuals with significant disabilities where the age of onset of the disability occurred before turning age __.
26
True or False: One does not need to be the age of 26 to be eligible to establish an ABLE account. One could be over the age of 26 as long as the onset occurred before the age of 26.
True.
If an individual meets the age requirement and is also receiving ___ or ____ they are automatically eligible for an ABLE account.
SSI or SSDI
True or False: A person can have 2 ABLE accounts.
False. One one ABLE account per person is allowed
Contributions to an ABLE account can be made by
Anyone
Contributions to ABLE accounts are made with ___ ___ dollars and is __ __ ___ for purposes of federal income taxes.
- After tax
2. Not tax deferred
Some states do allow ___ ___ ___ for ABLE accounts for contributions.
Income tax deductions
Contributions to ABLE accounts are ____ to a specific dollar amount per year, but can be adjusted.
Limited
This is an unincorporated association of two or more individuals.
Partnership
A partnership must complete a ___ ____ stating which of the partners can make transactions for the account.
Partnership agreement
An ___ ____ ___ must be obtained each year if any changes have been made.
Amended partnership agreement
In this partnership, all partners in the business have responsibility to manage the business. Ownership may be unequal, and specific responsibilities may be assigned to a specific partner.
General partnership
There is ___ ____ ____ in a partnership
No liability protection
A partnership is a __ ____ entity.
Tax reporting
A partnership is not a __ ___ entity.
Tax paying
Who pays taxes in partnerships?
The owners
These are unique forms of business that raise money to invest in real estate, oil and gas, equipment leasing, and other similar business ventures.
Direct participation programs (DPP)
DPPS are ___ ____ directly as a corporation.
Not taxed
____ are taxed from DPPS.
Owners/investors
There is ___ ____ ____ for an investor to divest interest in a DPP which makes DPPs highly illiquid.
No secondary market
The most common type of DPP is
Limited partnerships (LP)