Series 7: Chapter 16 Practice Questions

Chapter 16 Practice Questions

1. 1. Which of the following is permitted inside of your IRA account?
2. A. Purchasing life insurance
3. B. Purchasing art
4. C. Purchasing a variable annuity
5. D. Writing 10 call options on XYZ Corporation with no long position in the stock
6. 2. ERISA regulations apply to all of the following except:
7. A. Beneficiary designation and participation requirements
8. B. Section 457 plans
9. C. Vesting requirements
10. D. Disclosure requirements 
11. 3. The income tax burden is likely to be the lightest on retirement income coming out of a:
12. A. SEP IRA
13. B. Roth IRA
14. C. Defined benefit plan
15. D. Keogh plan
16. 4. A 57-year-old beginning substantially equal periodic payment plan payments under Rule 72(t) would have to continue receiving those payments: 
17. A. For five years 
18. B. For ten years 
19. C. Until age 59 1/2
20. D. At least until age 59 1/2, with mandatory recalculation prior to age 62
21. 5. The owner of a traditional IRA is required to begin taking distributions by what date?
22. A. December 31 of the year she turns 72
23. B. December 31 of the year she turns 59 1/2
24. C. April 1 of the year she turns 72
25. D. April 1 of the year after she turns 72
26. 6. Which of the following refers to an investor’s ability to avoid IRS penalties by taking substantially equal periodic payments?
27. A. Rule 59(a)
28. B. Section 1035
29. C. Rule 72(t)
30. D. Section 457
31. 7. All of the following are exceptions that would allow an investor to avoid the 10% tax penalty on IRA early withdrawals except:
32. A. Withdrawals for certain educational expenses
33. B. Death
34. C. Living expenses if unemployed
35. D. First-time home purchase up to $10,000
36. 8. Keogh plans are retirement plans used for:
37. A. S-corps
38. B. Non-profit organizations
39. C. Teachers
40. D. Sole proprietors
41. 9. All money coming out of a tax-qualified retirement plan is:
42. A. Taxable as ordinary income
43. B. Received ta