Question

Which of the following is true regarding 401(k) plans?

1. The employee takes on the market risk that the investment will underperform
2. It is better for employees who plan to change jobs
3. It is possible to borrow money from your account without penalty prior to age 591/2
4. All of the above are true

Which of the following is an advantage of using a trust for estate planning?

1. It avoids probate
2. It is considered part of the estate for tax purposes
3. It can be challenged
4. All of the above

How often must brokerages that hold securities for customers take a physical inventory (box count)?

1. Weekly
2. Monthly
3. Quarterly
4. Annually

Answer 1

1. Answer- option (d) all are true

• 401k plan is a retirement savings plan which allows the investors to reduce the market risk factors which decreases the market returns. So that at the time of maturity during the retirement age, it will generate moderate returns to them.
• It is advantageous during the job switch, because it allows to save money on the tax deferral basis. So that they can continue this retirement funds and avoid current taxes.
• Prior to the age of 59 1/2, this investment plan allows to distribute money from the account without any charges .As a result the investors can maintain ROTH accounts which is tax free. Hence all the options are true.

2. Answer- option (d). All of the above

• Estate planning is the most important aspect for the business to forecast their capital investment during the yearly budget planning.
• Trust is the valuable component which avoids conflicts among the partners. So that dividend distribution will be effective between the shareholders.
• Investors also adhere to tax advantages when there is trust among themselves. They can make their tax planning for the entire financial year. Reduction in the tax amount will increases profit margin or the business.
• Partners can challenge during liquidation and inflation period regarding their earnings. Hence all of the above options are true.

3. Answer- option (b)

• Brokerage hold securities for the investors on monthly basis to take a physical inventory.
• It is as per the investment guidelines of listed securities in the stock market. The brokerage maintenance fees and charges on monthly basis is mentioned in details on the prospectus.