Money Market Fund

Question 1

Examine each of the following portfolios and decide which of the three would be the best choice to fund the plan.

Justify your response in terms of the owner’s risk tolerance level, inflation protection level, UBTI concerns, and compliance with ERISA diversification requirements:

Portfolio 1: 70% invested in U.S. government Treasury securities with various maturities; 20% invested in a municipal bond fund; and 10% invested in a money market fund invested un U.S> Treasury bills.

Portfolio 2: 40% invested in an aggressive growth mutual fund; 20% invested in certificates of deposit; 20% invested in financial futures; and 20% invested in a gold and other precious metals mutual fund.

Portfolio 3: 40% invested in a balanced stock mutual fund; 30% invested in a guaranteed income contract with a two-year guarantee; 20% invested in an income stock fund; and 10% invested in a money market fund.

Question 2

At least 200 words for this and references if outside reources are used.

In regards to a qualified plan, discuss the tax implications to the employer, and the tax implications to the employee, of the following three situations:

(1) The employer makes a qualified plan contribution.

(2) The qualified plan trust earns investment income or capital gains.

(3) Retirement distributions are made to a qualified plan participant.