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11 Cards in this Set
- Front
- Back
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255pm to |
6 sections 23 pages 1. 40 mins . 5pg 2. 20 mins . 4 pg 3. 30 mins . 3 pg 4. 15 mins . 3 pg 5. 10 mins . 4 pg 6. Xx mins . 5 pg |
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Factors Influencing RLE |
Healthcare costs Long term care Hobbies Recreational activities Travel SSI Employer benefits Savings and investments Annuities and retirement accounts Dependents Inflation |
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3 leg stool of R |
Ssi Pensions, R plans Personal savings |
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Investment goals - 6 |
Capital appreciation Preservation of capital. Low risk, low rate of return, homebuyers, near retirees, match inflation rate Current income . Rather than capital appreciation Growth and income . Higher risk for high rate of return or loss Liquidity . Ex savings account Minimizing taxes . High income investors tax savings offset low rate of return, earnings not taxed |
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Risks that affect investors . 8 |
Purchasing power . Inflation risk Market risk . Financial securities, stocks and bonds Interest rate risk . Price changes of inv due to rates in capital market Maturity risk . Reinvestment at a lower rate at time of maturity Financial . Credit risk, issues may not pay investors as expected Business risk . Operation and management Liquidity. May not be accessible at a reasonable price Investment manager . Variability in performance |
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Types of investments . 6 |
Savings instruments . Free of market, interest and financial/credit risk (fdic), liquid, return lower than cost of inflation . Savings, cds, money market mutual fund, money market deposit account Stocks . Hold ownership in cooperation, share profits and losses, risky Bonds . Gov't and corps to find projects, fixed amount and maturity, corps riskier than savings/less risk than stocks, govt lower return, low liquidity risk, can be sold before maturity subject to MR Mutual funds . Managed pool, diversified, lifecycle or target date, usually follow and index is sp500, gradual shift to bonds Annuities . Contracts w IC, promise lifetime income, lump sum or series of payment premiums Real estate . Including commercial, retail, residential rental, mortgages, real estate investment trusts REIT, can create burdens, complex tax issues, difficult tenants |
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IRAS |
ERISA 1974 traditional IRA replaced pensions Taxpayer relief act 1997 Roth IRA Must earn taxable income, not investment, pension, annuity, or rental income TIRA Age restricted . RIRA not BIRA limit contributions based on gross income . Increased for inflation RIRA . Already taxed income TIRA contributions deducted from fed tax income when 1. No employee sponsored plan up to limit 2. In emp sp up to limit if gross income below sp limit adjusted for inflation TIRA tax will be paid later, tax deferred, distributions taxed as ordinary income, prior to 59.5 10% penalty applies, waived if health exception applies RIRA contributions but not earnings can be wd at any time wo tac or penalty . Earnings wo tax or penalty 59.5/5yr . Prior earnings taxed as ordinary income plus 10% penalty. May be waived for disability or death, 1st home RIRA not income tax ddbl (tax is paid) Penalized for withdraw before 59.5 (RIRA or less than 5 yrs old) TIRA Must start distribute before 70.5 . RIRA no distribution reqs
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Tax deferred R plans . 8 |
401k . Pretax salary . Employers may match . Tax deferred . Inflation adj limit. Over 50 higher limits . Restricted wd (59.5, no employment, death disability . Hardship defined by irs) Profit sharing plan . Employer % to employees . Preestablished formula based on compensation or c/age . Contrib not to exceed 25% of total comp . Unpredictable, combine w other R Thrift plan . (Savings) % of salary w employee match, may be limited pre or post tax . Pretax 401k penalties apply Keogh plan . Uninc biz owners self empl same as employees . Employees can participate. Must have earned income after profit loss . Irs formula deducted from gross income in tax return . May use other admin rules 403b . Employee of tax exempt org for charitable org to invest as tax sheltered annuity (pretax contrib) . 401k rules rules Simple . Savings incentive tax plan for employees . 100 or less empl . Except from admin reqs . Pretax contrib . matching . Min salary req . 401K rules . Higher limits after 50 Esop . Employee stock ownership plan . Like profit share but no profit reqd . May be cash or stock . 25% of payroll limit . Must sell back to employer at fair market value Sep plan . Simplified employee pension. TIRA w empl contribution . Higher contrib limit . Emplr must contrib if age 21 worked 1 year or 3 of last 5 yrs . Tax deferred |
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Employer sponsored R . 3 |
Defined benefit plans . 1% per year of employment on last 5 yrs worked, risk of nonpayment to employee Defined contribution plans . Up to 50% of 4% salary contrib . Employee responsible for amount earned/saved Defined benefit 401k . Combo . Vesting of 2 yrs for pension |
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Individual annuities . 3 |
Dates begin . Deferred or immediate Party bearing investment risk . Fixed dollar - bonds, real estate, low risk low return . Equity indexed annuity - stocks, min principle and min interest guaranteed but can increase. Variable annuity - diversified sub accounts paid at % of growth of each unit . Combo plan - annuity owner bears the risk, IC manages
Premium payment method . Flexible or single pay . Sp deferred or sp immediate |
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Social security program OASDHI . 8 |
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