SERIES 65 CORRECT FINAL EXAMS QUESTIONS
AND ANSWERS SURE A+
✔✔Treasury Bond (T-Bond) - ✔✔1. a maturity of more than 10 years.
2. exempt from state and local taxes.
3. purchased at face value and pay out interest payments semi-annually.
4. issued with a minimum denomination of $1,000 and maximum of $5 million.
5. After auction, bonds can be sold in the secondary market.
6. bonds can be bought directly from the government through TreasuryDirect at
http://www.treasurydirect.gov, thereby bypassing a broker.
✔✔U.S. Savings Bonds - ✔✔1. offer a fixed rate of interest over a fixed period of time.
2. not subject to state or local income taxes.
3. cannot be cashed until at least six months after purchase but maturity varies
somewhere between 15 to 30 years.
4. come in 8 values: $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000.
5. purchased directly from the Dept of the Treasury but can be cashed out at most
banks.
6. must be an American citizen.
✔✔Municipal Bonds - ✔✔1. are exempt from federal taxes and from most state and
local taxes.
2. issued by a state, municipality or county to finance its capital expenditures (such as
the construction of highways, bridges or schools).
✔✔Zero-Coupon Bonds - ✔✔a type of bond that makes no coupon payments but
instead is issued at a considerable discount to par value.
✔✔Brady Bonds - ✔✔1. are U.S. dollar denominated bonds that were issued by mainly
Latin American countries, with U.S. Government 30 year zero coupon bonds serving
as collateral to ensure payment of the principal.
2. were created in March of 1989 and named for the then U.S. Treasury Secretary,
Nicolas Brady.
,✔✔Yankee Bonds - ✔✔a bond denominated in U.S. dollars that is publicly issued in the
U.S. by foreign banks and corporations. These bonds must be registered under the
Securities Act of
1933 with the SEC before they can be sold.
✔✔Individual Retirement Arrangement (IRA), Traditional
[There are several other types of IRAs: Roth SIMPLE and SEP IRAs.] - ✔✔1. Maximum
contribution of $5,500 ($6,500 if you're age 50 or older), or your taxable compensation if
less with excess contributions taxed at 6% per year as long as they remain in the
account.
2. Can make contributions up to age 70 1/2.
3. Contributions may be tax deductible depending on the taxpayer's income, tax filing
status and coverage by an employer-sponsored retirement plan.
4. Distributions are taxed as income and any distributions before you age 59½ incur a
10% additional tax (You generally can make a tax-free withdrawal of contributions if you
do it before the due date for filing your tax return for the year in which you made them).
5. Required Minimum Distributions (RMD's) at age 70 1/2 or a 50% excise tax on the
amount not distributed as required.
(Depending on income, an individual may be able to fit into a lower tax bracket with tax-
deductible contributions during working years and also be in a lower tax bracket during
retirement).
✔✔Individual Retirement Arrangement (IRA), Traditional
Deduction Limits If You Are NOT Covered by a Retirement Plan at Work (2015) -
✔✔Full Deduction
S / HH / QW = any amount
MFJ / MFS (spouse not covered at work) = any amount
MFJ (spouse is covered at work) = $183,000 or less
Partial Deduction
MFJ (spouse is covered at work) = >$183,000 but <$193,000
MFS (spouse is covered at work) = <$10,000
No Deduction
MFJ (spouse is covered at work) = >$193,000
MFS (spouse is covered at work) = $10,000 or more
✔✔Individual Retirement Arrangement (IRA), Traditional
Deduction Limits If You Are Covered by a Retirement Plan at Work (2015) - ✔✔Full
Deduction
S / HH = $61,000 or less
MFJ / QW = $98,000 or less
, Partial Deduction
S / HH = >$61,000 but <$71,000
MFJ / QW = >$98,000 but <$118,000
MFS = <$10,000
No Deduction
S / HH = $71,000 or more
MFJ / QW = $118,000 or more
MFS = $10,000 or more
✔✔SIMPLE IRA
(Savings Incentive Match Plan for Employees) - ✔✔1. allows employees (including self-
employed individuals and employers to contribute to Traditional IRAs set up for
employees.
2. Employers CANNOT impose any other conditions for participating MORE restrictive
than requiring that employee has earned at least $5,000 in compensation during any 2
years before the current calendar year and
expects to receive at least $5,000 during the current calendar year.
3. Employer must contribute and employee may contribute (elective salary reduction
contributions only).
4. Elective salary reduction contributions cannot exceed $12,500 (2015 and 2016).
5. For employees age 50 or over, a $3,000 "catch-up" contribution is also allowed (2015
and 2016).
6. If employee participates in any other employer plan with elective salary reductions,
the total amount of all salary reduction contributions is limited to $18,000 (2015 and
2016).
7. Employer is required to contribute each year either:
a. 2% of employees compensation up to the annual limit of $265,000 for (2015 and
2016), or
b. a matching contribution up to 3% of compensation (not limited by the annual
compensation limit).
8. Employees are always 100% vested but participant loans are NOT permitted and the
assets may NOT be used as collateral.
9. Required Minimum Distributions (RMD's) at age 70 1/2.
10. Distributions before age 59-1/2 are subject to a 10% additional tax.
11. Distributions within the first two years of participation, are subject to a 25%
additional tax.
12. ideally suited as a start-up retirement savings plan for small business employers
with 100 or fewer employees.
13. Employer cannot have any other retirement plan.
14. do not have the start-up and operating costs of a conventional retirement plan and
no filing requirement for the employer.
15. established by adopting Form 5304-SIMPLE (employee picks financial institution)
✔✔Simplified Employee Pension Plan (SEP) IRA - ✔✔1. allows the EMPLOYER ONLY
to contribute to Traditional IRAs set up for employees.
AND ANSWERS SURE A+
✔✔Treasury Bond (T-Bond) - ✔✔1. a maturity of more than 10 years.
2. exempt from state and local taxes.
3. purchased at face value and pay out interest payments semi-annually.
4. issued with a minimum denomination of $1,000 and maximum of $5 million.
5. After auction, bonds can be sold in the secondary market.
6. bonds can be bought directly from the government through TreasuryDirect at
http://www.treasurydirect.gov, thereby bypassing a broker.
✔✔U.S. Savings Bonds - ✔✔1. offer a fixed rate of interest over a fixed period of time.
2. not subject to state or local income taxes.
3. cannot be cashed until at least six months after purchase but maturity varies
somewhere between 15 to 30 years.
4. come in 8 values: $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000.
5. purchased directly from the Dept of the Treasury but can be cashed out at most
banks.
6. must be an American citizen.
✔✔Municipal Bonds - ✔✔1. are exempt from federal taxes and from most state and
local taxes.
2. issued by a state, municipality or county to finance its capital expenditures (such as
the construction of highways, bridges or schools).
✔✔Zero-Coupon Bonds - ✔✔a type of bond that makes no coupon payments but
instead is issued at a considerable discount to par value.
✔✔Brady Bonds - ✔✔1. are U.S. dollar denominated bonds that were issued by mainly
Latin American countries, with U.S. Government 30 year zero coupon bonds serving
as collateral to ensure payment of the principal.
2. were created in March of 1989 and named for the then U.S. Treasury Secretary,
Nicolas Brady.
,✔✔Yankee Bonds - ✔✔a bond denominated in U.S. dollars that is publicly issued in the
U.S. by foreign banks and corporations. These bonds must be registered under the
Securities Act of
1933 with the SEC before they can be sold.
✔✔Individual Retirement Arrangement (IRA), Traditional
[There are several other types of IRAs: Roth SIMPLE and SEP IRAs.] - ✔✔1. Maximum
contribution of $5,500 ($6,500 if you're age 50 or older), or your taxable compensation if
less with excess contributions taxed at 6% per year as long as they remain in the
account.
2. Can make contributions up to age 70 1/2.
3. Contributions may be tax deductible depending on the taxpayer's income, tax filing
status and coverage by an employer-sponsored retirement plan.
4. Distributions are taxed as income and any distributions before you age 59½ incur a
10% additional tax (You generally can make a tax-free withdrawal of contributions if you
do it before the due date for filing your tax return for the year in which you made them).
5. Required Minimum Distributions (RMD's) at age 70 1/2 or a 50% excise tax on the
amount not distributed as required.
(Depending on income, an individual may be able to fit into a lower tax bracket with tax-
deductible contributions during working years and also be in a lower tax bracket during
retirement).
✔✔Individual Retirement Arrangement (IRA), Traditional
Deduction Limits If You Are NOT Covered by a Retirement Plan at Work (2015) -
✔✔Full Deduction
S / HH / QW = any amount
MFJ / MFS (spouse not covered at work) = any amount
MFJ (spouse is covered at work) = $183,000 or less
Partial Deduction
MFJ (spouse is covered at work) = >$183,000 but <$193,000
MFS (spouse is covered at work) = <$10,000
No Deduction
MFJ (spouse is covered at work) = >$193,000
MFS (spouse is covered at work) = $10,000 or more
✔✔Individual Retirement Arrangement (IRA), Traditional
Deduction Limits If You Are Covered by a Retirement Plan at Work (2015) - ✔✔Full
Deduction
S / HH = $61,000 or less
MFJ / QW = $98,000 or less
, Partial Deduction
S / HH = >$61,000 but <$71,000
MFJ / QW = >$98,000 but <$118,000
MFS = <$10,000
No Deduction
S / HH = $71,000 or more
MFJ / QW = $118,000 or more
MFS = $10,000 or more
✔✔SIMPLE IRA
(Savings Incentive Match Plan for Employees) - ✔✔1. allows employees (including self-
employed individuals and employers to contribute to Traditional IRAs set up for
employees.
2. Employers CANNOT impose any other conditions for participating MORE restrictive
than requiring that employee has earned at least $5,000 in compensation during any 2
years before the current calendar year and
expects to receive at least $5,000 during the current calendar year.
3. Employer must contribute and employee may contribute (elective salary reduction
contributions only).
4. Elective salary reduction contributions cannot exceed $12,500 (2015 and 2016).
5. For employees age 50 or over, a $3,000 "catch-up" contribution is also allowed (2015
and 2016).
6. If employee participates in any other employer plan with elective salary reductions,
the total amount of all salary reduction contributions is limited to $18,000 (2015 and
2016).
7. Employer is required to contribute each year either:
a. 2% of employees compensation up to the annual limit of $265,000 for (2015 and
2016), or
b. a matching contribution up to 3% of compensation (not limited by the annual
compensation limit).
8. Employees are always 100% vested but participant loans are NOT permitted and the
assets may NOT be used as collateral.
9. Required Minimum Distributions (RMD's) at age 70 1/2.
10. Distributions before age 59-1/2 are subject to a 10% additional tax.
11. Distributions within the first two years of participation, are subject to a 25%
additional tax.
12. ideally suited as a start-up retirement savings plan for small business employers
with 100 or fewer employees.
13. Employer cannot have any other retirement plan.
14. do not have the start-up and operating costs of a conventional retirement plan and
no filing requirement for the employer.
15. established by adopting Form 5304-SIMPLE (employee picks financial institution)
✔✔Simplified Employee Pension Plan (SEP) IRA - ✔✔1. allows the EMPLOYER ONLY
to contribute to Traditional IRAs set up for employees.
