FINRA Series-6 - Investment Company and Variable Contracts Products Representative Qualification Examination (IR) Exam
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Total 325 questions
Question #6 (Topic: )
Which of the following statements regarding the tax treatment of variable annuity contracts
is false?
is false?
A. Earnings on the contributions to a variable annuity are not taxed during the accumulation phase.
B. If an investor opts to make a random, partial, lump sum withdrawal, the entire amount of the withdrawal will be taxed as ordinary income to the investor.
C. If an investor opts to receive regular payments of a specific amount -i.e., annuities-part of each payment will be considered repayment of principal and will not be subject to taxation.
D. An investor who makes a withdrawal prior to having reached the age of 62 will be subject to a 10% penalty on the withdrawal.
Answer: D
Question #7 (Topic: )
Which of the following statements about 1035 exchanges are true?
I. A 1035 exchange refers to the exchange of all of the shares owned in one mutual fund
for shares of another mutual fund in the same family of funds.
II. A 1035 exchange refers to the exchange of one variable annuity contract for another
variable annuity contract without the need to pay tax on any of the income or capital
appreciation associated with the original contract.
III. A 1035 exchange refers to the exchange of a variable annuity contract for a whole life
insurance policy offered by the same company with no tax consequences to the
transaction.
I. A 1035 exchange refers to the exchange of all of the shares owned in one mutual fund
for shares of another mutual fund in the same family of funds.
II. A 1035 exchange refers to the exchange of one variable annuity contract for another
variable annuity contract without the need to pay tax on any of the income or capital
appreciation associated with the original contract.
III. A 1035 exchange refers to the exchange of a variable annuity contract for a whole life
insurance policy offered by the same company with no tax consequences to the
transaction.
A. I only
B. II only
C. I and II only
D. I, II, and III
Answer: B
Question #8 (Topic: )
George Geek is 30 years old, single, and earns $103,000 a year as a software engineer for
a small, start-up IT company. Georges company does not itself offer a retirement plan, and
George is considering his options. The current contribution limits for both the traditional IRA
and Roth IRA plans is the lesser of $5,000 or 100% of earned income.
Which of the following statements applies to Georges situation?
a small, start-up IT company. Georges company does not itself offer a retirement plan, and
George is considering his options. The current contribution limits for both the traditional IRA
and Roth IRA plans is the lesser of $5,000 or 100% of earned income.
Which of the following statements applies to Georges situation?
A. George’s contributions to a traditional IRA will be tax-deductible.
B. Georges contributions to a Roth IRA will be tax-deductible as long as his income is below the threshold specified by the IRS for the current year.
C. Assuming that George can contribute to both the traditional IRA and the Roth IRA under the current income thresholds, he will be allowed to contribute $5,000 to each of the plans.
D. Assuming that George can contribute to both a traditional IRA and a Roth IRA under the current income thresholds, his combined contribution to the two plans cannot exceed $5,000.
Answer: D
Question #9 (Topic: )
Which of the following are included in the expense ratio of a fund?
I. 12b-1 fees
II. brokerage costs incurred by the fund when it buys and sells securities
III. redemption fees
IV. management fees
I. 12b-1 fees
II. brokerage costs incurred by the fund when it buys and sells securities
III. redemption fees
IV. management fees
A. I and IV only
B. I, II, and IV only
C. I, III, and IV only
D. I, II, III, and IV
Answer: A
Question #10 (Topic: )
No: 108
Which of the following statements regarding a unit investment trust (UIT) is false?
Which of the following statements regarding a unit investment trust (UIT) is false?
A. A UIT has a fixed number of shares.
B. UITs are actively managed.
C. Shares of UITs trade on exchange floors.
D. All UITs are established with a termination date.
Answer: B
