Investment Vehicle Characteristics Series 65
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Who safeguards the securities held in a mutual fund's portfolio? - CORRECT ANSWER - The
custodian
The Investment Company Act of 1940 requires that investment companies employ the services
of a commercial bank as custodian to hold and safeguard the physical assets (cash and
investment portfolio) of the fund.
What is the tax penalty for the withdrawal of money from an IRA before age 59½? - CORRECT
ANSWER - Early withdrawals from an IRA are subject to a tax penalty amounting to 10% of
the taxable portion of the distribution.
Excess contributions to an IRA - CORRECT ANSWER - Excess contributions are taxed at
6% per year for each year the excess amounts remain in the IRA.
IRA withdrawals - CORRECT ANSWER - withdrawals can be made after 59.5 without
penalty
Traditional IRA RMD - CORRECT ANSWER - the RMD for traditional IRAs in 72/73
A client has made both tax-deductible and nondeductible contributions to a traditional IRA.
When distributions are taken from the IRA, - CORRECT ANSWER - they are taxed on a pro
rata basis (in proportion)
The portion of the distribution that is nontaxable must be prorated with amounts that are taxable.
For instance, if the individual contributed $2,000 in after-tax amounts and $8,000 in pre-tax
amounts, a distribution of $5,000 would be prorated to include $1,000 after-tax and $4,000 in
pre-tax assets.
, If an individual makes a withdrawal from her IRA at age 52, she pays no penalty tax if she -
CORRECT ANSWER - is disabled
Distributions from which of the following can be rolled over into an IRA? - CORRECT
ANSWER - Assets from any qualified corporate plan or from another IRA may be rolled over
into an IRA.
Based on the SECURE Act 2.0, an individual who is 73 on November 15, 2023, has an IRA's
first required minimum distribution date of - CORRECT ANSWER - An individual's first
required minimum distribution (RMD) is due by April 1 of the year after turning 73.
Mrs. Beech, age 52, as the sole survivor of her mother, recently inherited, among other assets, an
IRA. After receiving a distribution of the account's assets, she dutifully rolled over 100% of the
account value into a new rollover IRA. As a result, Mrs. Beech - CORRECT ANSWER - will
have to declare the entire IRA value as ordinary income
When an IRA is inherited, other than from a spouse, the only way to avoid a reportable
distribution is to do a trustee-to-trustee transfer. Because Mrs. Beech received the distribution,
the normal rollover rules do not apply. However, Mrs. Beech will not have to pay the 10%
penalty tax.
Traditional IRA income and capital gains - CORRECT ANSWER - The income and capital
gains earned in the account are tax deferred until the funds are withdrawn.
If a distribution is taken before reaching age 59 1/2, it is subject to income tax plus a 10%
penalty, not instead of (in lieu of) the taxes.
What is the name of the bond document that states the issuer's obligation to pay back a specific
amount of money on a specific date? - CORRECT ANSWER - The indenture
As a rule, loans from a 401(k) plan must be repaid within how many years? - CORRECT
ANSWER - 5
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Who safeguards the securities held in a mutual fund's portfolio? - CORRECT ANSWER - The
custodian
The Investment Company Act of 1940 requires that investment companies employ the services
of a commercial bank as custodian to hold and safeguard the physical assets (cash and
investment portfolio) of the fund.
What is the tax penalty for the withdrawal of money from an IRA before age 59½? - CORRECT
ANSWER - Early withdrawals from an IRA are subject to a tax penalty amounting to 10% of
the taxable portion of the distribution.
Excess contributions to an IRA - CORRECT ANSWER - Excess contributions are taxed at
6% per year for each year the excess amounts remain in the IRA.
IRA withdrawals - CORRECT ANSWER - withdrawals can be made after 59.5 without
penalty
Traditional IRA RMD - CORRECT ANSWER - the RMD for traditional IRAs in 72/73
A client has made both tax-deductible and nondeductible contributions to a traditional IRA.
When distributions are taken from the IRA, - CORRECT ANSWER - they are taxed on a pro
rata basis (in proportion)
The portion of the distribution that is nontaxable must be prorated with amounts that are taxable.
For instance, if the individual contributed $2,000 in after-tax amounts and $8,000 in pre-tax
amounts, a distribution of $5,000 would be prorated to include $1,000 after-tax and $4,000 in
pre-tax assets.
, If an individual makes a withdrawal from her IRA at age 52, she pays no penalty tax if she -
CORRECT ANSWER - is disabled
Distributions from which of the following can be rolled over into an IRA? - CORRECT
ANSWER - Assets from any qualified corporate plan or from another IRA may be rolled over
into an IRA.
Based on the SECURE Act 2.0, an individual who is 73 on November 15, 2023, has an IRA's
first required minimum distribution date of - CORRECT ANSWER - An individual's first
required minimum distribution (RMD) is due by April 1 of the year after turning 73.
Mrs. Beech, age 52, as the sole survivor of her mother, recently inherited, among other assets, an
IRA. After receiving a distribution of the account's assets, she dutifully rolled over 100% of the
account value into a new rollover IRA. As a result, Mrs. Beech - CORRECT ANSWER - will
have to declare the entire IRA value as ordinary income
When an IRA is inherited, other than from a spouse, the only way to avoid a reportable
distribution is to do a trustee-to-trustee transfer. Because Mrs. Beech received the distribution,
the normal rollover rules do not apply. However, Mrs. Beech will not have to pay the 10%
penalty tax.
Traditional IRA income and capital gains - CORRECT ANSWER - The income and capital
gains earned in the account are tax deferred until the funds are withdrawn.
If a distribution is taken before reaching age 59 1/2, it is subject to income tax plus a 10%
penalty, not instead of (in lieu of) the taxes.
What is the name of the bond document that states the issuer's obligation to pay back a specific
amount of money on a specific date? - CORRECT ANSWER - The indenture
As a rule, loans from a 401(k) plan must be repaid within how many years? - CORRECT
ANSWER - 5
