Unit Investment Trusts and Retirement Plans

Unit investment trusts

A unit investment trust (UIT) buys a mostly fixed basket of securities and holds them. There is no active manager trading every day. You buy units, not mutual-fund shares. The trust has a set end date. Think of it as a sealed sampler box: what is in it at the start is what you own until the box expires.

UITs are investment companies under the 1940 Act. They are not the same as an ETF, even though both can track a list of names.

Retirement accounts a Series 6 rep will meet

• Traditional IRA: contributions may be deductible; withdrawals of pre-tax money are taxed. Required minimum distributions (RMDs) start at the age Congress currently sets (SECURE 2.0 uses 73 for many recent retirees).
• Roth IRA: contributions are after-tax; qualified withdrawals are tax-free. No RMDs for the original owner.
• SEP IRA: an employer plan often used by small businesses; the employer makes the contribution.
• SIMPLE IRA: a small-employer plan with employee deferrals and an employer match or nonelective contribution.
• 401(k) and 403(b): workplace plans. 403(b) is common at schools and nonprofits.

Rollovers

Moving money from a 401(k) to an IRA can be a direct rollover (trustee to trustee) or a 60-day rollover. If the check is payable to the worker, 20% withholding often applies and the full amount must be deposited within 60 days to avoid tax. Direct is cleaner.

529 plans

Municipal fund securities (529 college savings plans) can appear on the Series 6. They are state-sponsored, often offer state-tax benefits, and are meant for education. Suitability includes the beneficiary's time horizon and the state's own plan versus an out-of-state plan.