Financial Advisor Interview Questions

1) Is HSA same as 401K?
Though they are different entities both invest in bank deposits, mutual funds, earn dividends, earn interest and the earnings grow tax free. HSA can be utilized to pay medical bills as well as one can utilize the amount in HSA to pay insurance premium while the person happens to be out of the job. Some 401k plans allow loans of about 50% of the amount vested with a maximum limit of $50000. However, 401k loans come with some restrictions
In case of HSA though this operates as an investment account whose earnings grow tax free it may not be possible to go for a loan against HSA. All we can do is use it for acceptable medical reimbursement
2) Give details on many different types of IRA retirement accounts :-
There are many different types of IRA – Traditional IA, Roth IRA, Self-directed IRA etc
Similarities – All of these are self-directed retirement investment schemes. In all these schemes we can choose to invest in equities, stocks, shares, fixed income products including bank CD’s, precious metals like gold,silver,platinum,palladium
Differences – Traditional IRA is pre-tax saving whereas ROTH IRA is post tax-saving
Traditional IRA is taxable upon withdrawal. ROTH IRA is not taxable upon withdrawal and 10% penalty on early withdrawal is deferred in case of ROTH IRA
Choose the one that fits right as both are good retirement options
Self-directed IRA – This is a popular IRA among real estate investment community as the amount can be withdrawn to purchase properties both primary as well as rental properties. The rent made needs to be credited back onto IRA. Talk to your IRA provider to see if they offer one
3) Who does operate the 529 plan?
529 plan is operated by state, educational institution