SIE: Retirement Plans

Variable Annuities are
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Terms in this set (19)
Variable Annuities are
Non-fixed UITs
For a Variable Annuity, what happens to dividends and capital gains distributions etc?
Interest payments, dividends, capital gains are realized from the securities in the separate account, they are automatically reinvested to buy more accumulation units. Big benefit is that the reinvested dividends and capital gains build tax deffered.
Variable Life Insurance
Premiums are invested in separate account, sold with a prospectus. Permanent insurance that builds cash value based on the performance of separate account.
Investment risk in a variable annuity contract is carried by the
purchaser
Variable annuities must be registered with who? Sold with what?
They are registered with the SEC, sold with prospectus, form of investment company, and sold with a sales charge.
In a variable annuity contract, the number of what is fixed
annuity units
ERISA are tax ______
tax deferred and are employer sponsored
Profit sharing, defined contribution, defined benefit, 403 b, payroll deduction. only covers private plans
Tax qualified vs unqualified
Tax qualified plans are deductible against taxable income (contributions have not been taxed)
Non-tax qualified plans are not deductible. earnings build tax deferred and the portion of distributions representing build up portion is taxable.
IRA Contributions made by
April 15th of following year.
IRA rollover
60 days once a year.
Keogh (HR-10) Plans25% 61,000 max effective rate is 20%ERISA Requirementsnon discrimination, employees must earn benefits over 5 years (vesting) at 20%/year of service, fiduciary responsibility of plan trustee, prudent man rule (no speculative strategies), whole life insurance not alloweddefined contribution planretirement plan in which the employer sets up an individual account for each employee and specifies the size of the investment into that accountdefined benefit planpension plan that guarantees a specified level of retirement income. Older employees closer to retirements have a much greater benefit than younger employeesprofit-sharing plana benefit whereby employees may share in the profits of the businessDeferred Compensation PlanA nonqualified retirement plan whereby the employee defers receiving current compensation in favor of a larger payout at retirement (or in the case of disability or death).SEP IRAA retirement plan created to benefit self-employed persons and small business owners. Contributions to a SEP IRA are typically 100% tax deductible and earnings grow tax deferred. $61,000 maxSIMPLE IRASavings Incentive Match Plan for Employees A retirement plan sponsored by companies with fewer than 100 employees; though it may be structured as a 401(K), it avoids some of the administrative fees and paperwork of those plans. 14,000 maxCoverdell ESAFormerly known as the Education IRA, this offers tax-deferred growth and tax-free withdrawal of funds used to pay for education. Subject to certain earnings limits, after-tax contributions up to a certain amount per year may be made for a beneficiary up until the beneficiary's 18th birthday. The account may be used for qualifying educational expenses at any grade level, from elementary school through graduate school.