Series 6 Chapter 3-4

Front 1

Regulates, private sector, qualified retirement plans

Back 1

ERISA

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Employer responsible for funding

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Defined benefit

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Employer and employee funded

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Defined contribution

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Defined contribution plan where the employer contributes portions of company profits

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Profit-sharing plan

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What type of 401(k) plan that is funded with after-tax dollars?

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Roth 401(k)

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Defined contribution, establish by smaller employers individual retirement account, establish for each qualifying employee

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Simplified employee pension (SEP)

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In SEP employees must be fully vested in all contributions

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Immediately

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Defined contribution, adopted by small businesses of 100 or fewer employees

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Savings incentive match plans for employees (SIMPLE)

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This plan can be established as an IRA or a 401(k)

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Simple

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For employees of not-for-profit organizations or public school systems

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403B plan

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Defined contribution, plan, and subject to ERISA regulations

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Employee stock ownership plans (ESOP)

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What is the tax penalty on a premature distribution?

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10% penalty

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What is the tax penalty on excess contribution?

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6%

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What is the tax penalty on a failure to make required minimum distribution?

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50% penalty on taxable portion

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What does a non-qualified retirement plan mean?

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Does not the ERISA standards

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I plan for the employees income is deferred to a later date, and often only available to senior management

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Deferred compensation plans

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A nonqualified deferred compensation plan that may be government or non-government

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457 plan

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A type of retirement account that has contribution limits has tax deferred growth and can be set up for a spouse

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Traditional IRA

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Investment choices in a traditional IRA can include anything except

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Life insurance

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Tax-deductible IRAs are 100% taxable as

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Ordinary income

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Trustee to trustee, beneficiary never touches the assets, no tax implications

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Transfer

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Beneficiary takes possession of the funds, must be moved to a new retirement account. Within 60 days, taxes and penalties will apply, may only occur once a year.

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Rollover

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What do traditional IRAs and Roth IRAs have in common

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Same annual contribution limits and catch up provisions

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Contributions are made on after tax basis there’s no required minimum distribution investor must be below income threshold in the entire growth is tax free

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Roth IRA

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Notre to convert a traditional IRA to a Roth IRA, Texas must be paid on the taxable portion of

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Converted funds

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Have to do with new issues and the primary market

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Securities act of 1933

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Has financial liability, and his paid from the underwriting spread

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Underwriting syndicate

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Has no financial liability, but assist the underwriters in selling new issues

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Selling group

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How long is the cooling off period

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Minimum of 20 days

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US government securities agency securities, and Municipal securities are all

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Exempt security

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Regulation D has to do with

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Private placement Offerings

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Defines an accredited investor

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Rule 501

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Deals with offerings of less than $10M in any 12 month period

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Rule, 504

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Issuers can raise an unlimited amount of money

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Rule 506

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Accredited investor’s need to follow what rule

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1-2-3 rule

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Rule _____ means that majority of employees must be based in the state

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147

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Evidence of ownership, has a limited liability, and is last in the liquidation priority

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Common stock

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Equity security, cannot vote, and interest rate sensitive

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Preferred stock

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Debt obligation of a corporation can be secured or unsecured

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Corporate bond

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Legal agreement on terms of the loan

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Trust, indenture

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Backed by specific collateral

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Secured bond

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Backed by the full faith and credit of the issuer

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Unsecured bond

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Dentures, subordinate, dentures, guaranteed bonds, income bonds are all examples of

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Unsecured bond

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Mortgage bonds, equipment, trust certificates, and collateral. Trust certificates are all examples of.

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Secured bond

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All corporate debt issues are subject to

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Interest rate risk

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Short term, sold at a discount, (4,13,26,52 weeks)

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T-bills

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Intermediate term, 2 to 10 years, sold at par

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T notes

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Long-term 10 to 30 years sold at par

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T-bond

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Principal amount is adjusted semi annually based on changes in CPI, no inflation risk

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Tips (treasury, inflation, protected securities)

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Is a direct obligation of the US government and is zero coupon security

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T strips

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Guaranteed by the government, monthly payments to investors, a principal and interest

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GNMA pass through certificates

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The risk of Paying it off ahead of time

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Pre-payment risk

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The risk of not paying it off in time

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Extension risk

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New issue underwriting requires a

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Official statement

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With new issues, the official statement must be provided to the

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MSRB

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Filing of official statements and program disclosure documents

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EMMA (electronic municipal market access system)

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Tax equivalent yield for Municipal

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Municipal yield /(100%-tax bracket %)

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Net yield for corporate

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Corporate yield X (100%-tax bracket %)

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T bills, commercial, paper, bankers, acceptance, negotiable CDs and T notes and T bonds with less than one year to mature are all

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Money market securities

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Commercial paper matures in

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270 days or less

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Finance foreign trade

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Bankers acceptance