Question 1

Matching contributions by employers are more common with 403(b) and 457 plans than with 401(k) plans.

Accepted Answer

A) True 
 B)False  False

Question 2

Marie, a 67-year-old, is receiving Social Security benefits. She received $25,000 in interest and dividends this year. Her Social Security benefits are:

Accepted Answer

A)  subject to an earnings test. 
B)  reduced to half because of these earnings. 
C)  not reduced because of these earnings. 
D)  reduced by the federal tax paid on her interest income. 
E)  reduced by a penalty. 
A)  subject to an earnings test. 
B)  reduced to half because of these earnings. 
C)  not reduced because of these earnings. 
D)  reduced by the federal tax paid on her interest income. 
E)  reduced by a penalty. C

Question 3

Many people tend to be too conservative when investing their retirement funds.

Accepted Answer

A) True 
 B)False  True

Question 4

Retirement planning starts with:

Accepted Answer

A)  determining the size of the required nest egg. 
B)  considering the longevity of the retiree. 
C)  defining the investment program. 
D)  determining the interest on income-earning assets. 
E)  setting retirement goals. 
A)  determining the size of the required nest egg. 
B)  considering the longevity of the retiree. 
C)  defining the investment program. 
D)  determining the interest on income-earning assets. 
E)  setting retirement goals.

Question 5

Which of the following statements regarding a refund annuity is true?

Accepted Answer

A)  The monthly income provided by the policy varies as a function of the insurer's actual investment experience. 
B)  The insurance company agrees to pay a guaranteed rate of interest on the insured's money. 
C)  A specified monthly income is provided for a stated number of years without consideration of any life contingency. 
D)  If the annuitant dies, the designated beneficiary receives monthly payments until the total purchase price of the annuity is paid back. 
E)  The insurance company guarantees the annuitant a stated amount of monthly income for life. 
A)  The monthly income provided by the policy varies as a function of the insurer's actual investment experience. 
B)  The insurance company agrees to pay a guaranteed rate of interest on the insured's money. 
C)  A specified monthly income is provided for a stated number of years without consideration of any life contingency. 
D)  If the annuitant dies, the designated beneficiary receives monthly payments until the total purchase price of the annuity is paid back. 
E)  The insurance company guarantees the annuitant a stated amount of monthly income for life.

Question 6

There is no penalty for early withdrawal of an annuity.

Accepted Answer

A) True 
 B)False

Question 7

The employer retirement plan that is intended to promote employee productivity and allows the employer to vary the amount of annual contributions is a:

Accepted Answer

A)  qualified defined contribution plan. 
B)  thrift and savings plan. 
C)  profit-sharing plan. 
D)  401(k) plan. 
E)  403(b) plan. 
A)  qualified defined contribution plan. 
B)  thrift and savings plan. 
C)  profit-sharing plan. 
D)  401(k) plan. 
E)  403(b) plan.

Question 8

Henry has a defined benefit plan that promises an annual retirement benefit based on 2% of his final 5-year average annual salary for each year of service. At retirement, Henry has 21 years of service and had an average salary of $95,000 over the last 5 years. His annual benefit will be:

Accepted Answer

A)  $95,000. 
B)  $60,500. 
C)  $49,875. 
D)  $39,900. 
E)  $15,200. 
A)  $95,000. 
B)  $60,500. 
C)  $49,875. 
D)  $39,900. 
E)  $15,200.

Question 9

Contributions to employer-sponsored profit-sharing retirement plans are invested only in securities issued by the employing firm itself.

Accepted Answer

A) True 
 B)False

Question 10

The average level of Social Security benefits for retirees aged 67 and above is adjusted upward each year with subsequent increases in the:

Accepted Answer

A)  retirees' income. 
B)  number of dependents. 
C)  quality of life. 
D)  cost of living. 
E)  preretirement cost of living. 
A)  retirees' income. 
B)  number of dependents. 
C)  quality of life. 
D)  cost of living. 
E)  preretirement cost of living.

Question 11

You will receive the largest monthly payment under an annuity contract when the annuity disbursement option is the:

Accepted Answer

A)  life annuity with no refund. 
B)  life annuity, period certain. 
C)  refund annuity. 
D)  annuity certain. 
E)  temporary life annuity. 
A)  life annuity with no refund. 
B)  life annuity, period certain. 
C)  refund annuity. 
D)  annuity certain. 
E)  temporary life annuity.

Question 12

If Lisa, age 64, works part-time, she will be subject to an earnings test that limits the amount of income she can earn before she starts losing some of her Social Security benefits.

Accepted Answer

A) True 
 B)False

Question 13

SEP plans are aimed at self-employed persons with no employees.

Accepted Answer

A) True 
 B)False

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Jake wants to convert part of his retirement savings into income now. He should purchase a [ deferred | immediate ] annuity.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 15

Bill has worked for Excellent Corp. for 4 years. During this period, Excellent Corp. has contributed $25,000 to his retirement plan. Assuming the company uses graded vesting, how much will Bill be able to roll into an individual retirement account (IRA) if he leaves Excellent Corp. at the end of 4 years?

Accepted Answer

A)  $0 
B)  $5,000 
C)  $10,000 
D)  $15,000 
E)  $20,000 
A)  $0 
B)  $5,000 
C)  $10,000 
D)  $15,000 
E)  $20,000

Question 16

The cash benefits provided by Social Security come from:

Accepted Answer

A)  voluntary contributions made by employees and employers. 
B)  payroll taxes paid by covered employees and their employers. 
C)  state and federal income taxes paid by employees and employers. 
D)  charitable contributions made by the federal government. 
E)  the U.S. Treasury. 
A)  voluntary contributions made by employees and employers. 
B)  payroll taxes paid by covered employees and their employers. 
C)  state and federal income taxes paid by employees and employers. 
D)  charitable contributions made by the federal government. 
E)  the U.S. Treasury.

Question 17

If you withdraw funds from a Keogh plan before age 59½, you will have to pay a _____ federal income tax penalty.

Accepted Answer

A)  5% 
B)  10% 
C)  15% 
D)  20% 
E)  25% 
A)  5% 
B)  10% 
C)  15% 
D)  20% 
E)  25%

Question 18

A person born in 1960 or later has to be _____  years old to be able to retire with full Social Security benefits.

Accepted Answer

A)  59 
B)  62 
C)  64 
D)  67 
E)  72 
A)  59 
B)  62 
C)  64 
D)  67 
E)  72

Question 19

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
The Social Security tax rate is paid [ up to a taxable maximum | on all earnings ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 20

Lillian has a defined benefit plan that promises an annual retirement benefit based on 2% of her final 3-year average annual salary for each year of service. At retirement, Lillian has 15 years of service and had an average salary of $80,000 over the last 3 years. What is the amount of her annual benefit?

Accepted Answer

A)  $65,000 
B)  $50,500 
C)  $35,400 
D)  $24,000 
E)  $0 
A)  $65,000 
B)  $50,500 
C)  $35,400 
D)  $24,000 
E)  $0

Matching contributions by employers are more common with 403(b) and 457 plans than with 401(k) plans.

Marie, a 67-year-old, is receiving Social Security benefits. She received $25,000 in interest and dividends this year. Her Social Security benefits are:

Many people tend to be too conservative when investing their retirement funds.

Retirement planning starts with:

Which of the following statements regarding a refund annuity is true?

There is no penalty for early withdrawal of an annuity.

The employer retirement plan that is intended to promote employee productivity and allows the employer to vary the amount of annual contributions is a:

Henry has a defined benefit plan that promises an annual retirement benefit based on 2% of his final 5-year average annual salary for each year of service. At retirement, Henry has 21 years of service and had an average salary of $95,000 over the last 5 years. His annual benefit will be:

Contributions to employer-sponsored profit-sharing retirement plans are invested only in securities issued by the employing firm itself.

The average level of Social Security benefits for retirees aged 67 and above is adjusted upward each year with subsequent increases in the:

You will receive the largest monthly payment under an annuity contract when the annuity disbursement option is the:

If Lisa, age 64, works part-time, she will be subject to an earnings test that limits the amount of income she can earn before she starts losing some of her Social Security benefits.

SEP plans are aimed at self-employed persons with no employees.

The cash benefits provided by Social Security come from:

If you withdraw funds from a Keogh plan before age 59½, you will have to pay a _____ federal income tax penalty.

A person born in 1960 or later has to be _____ years old to be able to retire with full Social Security benefits.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. The Social Security tax rate is paid [ up to a taxable maximum | on all earnings ].

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds and Real Estate

Preserving Your Estate

Filters

Exam 14: Planning for Retirement

Matching contributions by employers are more common with 403(b) and 457 plans than with 401(k) plans.

Marie, a 67-year-old, is receiving Social Security benefits. She received $25,000 in interest and dividends this year. Her Social Security benefits are:

Many people tend to be too conservative when investing their retirement funds.

Retirement planning starts with:

Which of the following statements regarding a refund annuity is true?

There is no penalty for early withdrawal of an annuity.

The employer retirement plan that is intended to promote employee productivity and allows the employer to vary the amount of annual contributions is a:

Henry has a defined benefit plan that promises an annual retirement benefit based on 2% of his final 5-year average annual salary for each year of service. At retirement, Henry has 21 years of service and had an average salary of $95,000 over the last 5 years. His annual benefit will be:

Contributions to employer-sponsored profit-sharing retirement plans are invested only in securities issued by the employing firm itself.

The average level of Social Security benefits for retirees aged 67 and above is adjusted upward each year with subsequent increases in the:

You will receive the largest monthly payment under an annuity contract when the annuity disbursement option is the:

If Lisa, age 64, works part-time, she will be subject to an earnings test that limits the amount of income she can earn before she starts losing some of her Social Security benefits.

SEP plans are aimed at self-employed persons with no employees.

The cash benefits provided by Social Security come from:

If you withdraw funds from a Keogh plan before age 59½, you will have to pay a _____ federal income tax penalty.

A person born in 1960 or later has to be _____ years old to be able to retire with full Social Security benefits.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. The Social Security tax rate is paid [ up to a taxable maximum | on all earnings ].

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds and Real Estate

Preserving Your Estate

Filters