vocab 3 Flashcards
What U.S. Government agency, created by the ‘34 Act, enforces securities laws?
The Securities and Exchange Commission (SEC)
Define an insider.
Officers, directors, partners, greater than 10% owners, and immediate family members of all listed
Trading on material, non-public information is considered __________________.
insider trading.
A corporate officer informs his son of an upcoming earnings report and the son effects trades. Is this a violation?
Yes. Both parties, the tipper (officer) and the tippee (the son), have violated the Insider Trading Act.
The criminal penalties for insider trading by individuals is a maximum of $____________ and/or ____ years in prison.
$5 million and/or 20 years
What is the criminal penalty for insider trading by corporations?
$25 million per violation
Who is eligible to contribute to a qualified annuity?
Public school employees [403(b)] and certain non-profit organization employees [501(c)3]
____% of earned income up to $_______ is the maximum contribution to an IRA.
100% of earned income up to $5,000 is the maximum contribution to an IRA.
If Joe is 55 years old, how much could he contribute to his IRA?
For anyone 50 or older, an additional $1,000 is allowed, making the maximum contribution $6,000.
A contribution of $_______ can be made to a Spousal IRA for a non-working spouse.
$5,000
What is the penalty for making excess contributions to an IRA?
6% of the excess
True or False: Excess contributions made to an IRA will still be deductible and will grow tax-deferred.
False. Excess contributions are non-deductible and will not grow on a tax-deferred basis
IRA contributions must be made in what form?
Cash
What are some of the acceptable investments for IRA contributions?
Stocks, bonds, mutual funds, and CDs
What are some of the investments that are not suitable for IRA contributions?
Collectibles, insurance, and metals (except U.S. gold and silver coins)
When is an individual (single filer) eligible to make tax-deductible contributions to a Traditional IRA?
When not covered by an employer-sponsored plan and he is below an adjusted gross income limit.
Rollovers must be completed within ____ days.
60
Only one rollover is allowed per rolling ____ months.
12
There is a ____% penalty for early withdrawals from an IRA.
10%
True or False: To avoid a late withdrawal penalty, IRAs have a required minimum distribution (RMD) provision.
True
What is the late withdrawal penalty?
50% of the amount that should have been taken (an actuarial amount).
How is a Roth IRA contribution different from a Traditional IRA contribution?
The Roth IRA contribution is always made on an after-tax basis.
How are withdrawals from a Traditional IRA treated for tax purposes?
If all contributions were deductible, then the entire withdrawal is taxed as ordinary income.
How are withdrawals from a Roth IRA treated for tax purposes?
Withdrawals will be tax-free if the account is open for at least 5 years and is not considered an early withdrawal.