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1.
Contributions to variable annuities grow tax-deferred until you take them out at retirement.
True. That is one of their big attractions.
2.
Which is a benefit of capital losses?
They can cancel out capital gains, and to the extent that losses exceed gains, you can deduct a net loss of up to $3,000 from your taxable income.
3.
Municipal bonds are popular with investors because they are free of ______ tax.
Federal and sometimes state. Muni bonds are free of federal and sometimes state taxes. This can sometimes make them more attractive than bonds that pay higher interest rates. It depends on your tax bracket.
4.
How do tax-managed funds limit shareholders' tax burdens?
They avoid dividend-paying stocks, they hold securities for a long time, and they sell losing stocks to offset gains in winning stocks. Tax-managed funds use a variety of strategies--not just one--to limit taxes.
5.
Exchange-traded funds _______ pass capital gains taxes to their shareholders.
Do not. ETFs only generate taxes by owning dividend-paying stocks or by changing their holdings to reflect changes in their indexes.
