Question 1

How are distributions/payouts/settlements taxed?

Accepted Answer

Annuity payouts are taxed as n

Question 2

Frank is considering a new job. However he is concerned about his pension fund. He knows that ________ which is the requirement that he must work for his firm for a specified period of time prior to gaining ownership of the retirement contributions made by his employer has to be met first.

Accepted Answer

A)  tenuring 
B)  certifying 
C)  vesting 
D)  validating 
E)  none of the above 
A)  tenuring 
B)  certifying 
C)  vesting 
D)  validating 
E)  none of the above

Question 3

Which of the following statements about saving for college is not true?

Accepted Answer

A)  The Coverdell Education Savings Account works just like the Roth IRA, except with respect to contributions. 
B)  If the money in a Coverdell Education Savings Account isn't used for college, taxes and penalties may apply. 
C)  Some 529 plans are prepaid college tuition plans. 
D)  You must open a 529 plan sponsored by the state in which you reside. 
E)  529 college savings plans offer more flexibility than prepaid college tuition plans. 
A)  The Coverdell Education Savings Account works just like the Roth IRA, except with respect to contributions. 
B)  If the money in a Coverdell Education Savings Account isn't used for college, taxes and penalties may apply. 
C)  Some 529 plans are prepaid college tuition plans. 
D)  You must open a 529 plan sponsored by the state in which you reside. 
E)  529 college savings plans offer more flexibility than prepaid college tuition plans.

Question 4

By law, everyone must contribute the maximum amount into their 401(k) plans at work.

Accepted Answer

A) True 
 B)False

Question 5

Contributions to a traditional IRA are always tax deductible.

Accepted Answer

A) True 
 B)False

Question 6

Jahwana works for a large corporation with a 401(k) retirement plan. The company matches dollar for dollar the first 5% of the employee's salary contributed to the 401(k). Jahwana currently earns $40,000 in gross salary and she currently contributes 15% of her salary into her 401(k). How much money in dollars is the total contribution to her account every year?

Accepted Answer

A)  $2,000 
B)  $4,000 
C)  $6,000 
D)  $8,000 
A)  $2,000 
B)  $4,000 
C)  $6,000 
D)  $8,000

Question 7

What are the advantages and disadvantages of a defined-contribution plan like a 401k?

Accepted Answer

The big advantages are the tax-deductibi

Question 8

Social Security is a system where current workers' pay taxes that are used to pay current retirees' benefits. How is Social Security funded?

Accepted Answer

A)  Income taxes by all Americans 
B)  Payroll taxes on employees up to a salary cap. 
C)  Payroll taxes on employers up to a salary cap. 
D)  All of the above are correct 
E)  Only B and C are correct. 
A)  Income taxes by all Americans 
B)  Payroll taxes on employees up to a salary cap. 
C)  Payroll taxes on employers up to a salary cap. 
D)  All of the above are correct 
E)  Only B and C are correct.

Question 9

The Savers Tax Credit is designed to encourage low to moderate income workers contribute to their retirement accounts.

Accepted Answer

A) True 
 B)False

Question 10

A Coverdell Education Savings Account works just like the Roth IRA for qualified education expenses, except with respect to contributions.

Accepted Answer

A) True 
 B)False

Question 11

Social Security is a plan where current workers' contributions pay for current retiree's benefits.

Accepted Answer

A) True 
 B)False

Question 12

A(n)________ is a pension plan in which you and your employer or your employer alone contribute funds directly to a retirement account set aside specifically for you.

Accepted Answer

A)  defined-benefit plan 
B)  cash balance plan 
C)  defined-contribution plan 
D)  percentage plus inflation plan 
E)  none of the above 
A)  defined-benefit plan 
B)  cash balance plan 
C)  defined-contribution plan 
D)  percentage plus inflation plan 
E)  none of the above

Question 13

Many older companies have changed from a defined-benefit plan to a(n) ________, which is a retirement plan where workers are credited with a percentage of their pay each year, plus a predetermined rate of interest.

Accepted Answer

A)  funded pension plan 
B)  cash balance plan 
C)  unfunded pension plan 
D)  percentage plus inflation plan 
E)  none of the above 
A)  funded pension plan 
B)  cash balance plan 
C)  unfunded pension plan 
D)  percentage plus inflation plan 
E)  none of the above

Question 14

Why does a tax-deferred retirement account accumulate more money than a taxable account, assuming the same amount is contributed every year and the accounts earn the same return every year?

Accepted Answer

A)  There are different investment options available for tax-deferred accounts. 
B)  You can take bigger risks with assets that generate higher returns in a tax-deferred account. 
C)  With tax-deferred accounts, there are no income or capital gains tax liabilities on account activity. 
D)  All of the above are correct 
E)  Only A and B are correct. 
A)  There are different investment options available for tax-deferred accounts. 
B)  You can take bigger risks with assets that generate higher returns in a tax-deferred account. 
C)  With tax-deferred accounts, there are no income or capital gains tax liabilities on account activity. 
D)  All of the above are correct 
E)  Only A and B are correct.

Question 15

Erica works for a company with a 401(k) plan. The company matches at $0.50 on the dollar the first 6% of the employee's salary contributed to the 401(k). If Erica earns $90,000 and contributes 12% of her salary, how much will the employer match be in dollars for the year?

Accepted Answer

A)  $1,400 
B)  $2,700 
C)  $3,500 
D)  $6,200 
A)  $1,400 
B)  $2,700 
C)  $3,500 
D)  $6,200

Question 16

Contributions to Roth IRAs are tax deductible.

Accepted Answer

A) True 
 B)False

Question 17

According to the author, 401(K) plans are actually do it yourself variation of a profit-sharing/thrift plan.

Accepted Answer

A) True 
 B)False

Question 18

Jose does not have a retirement plan at work. He currently earns $30,000 in salary and is in the 15% marginal tax bracket. If he contributes the maximum contribution of $5,000 to his traditional IRA, how much money will he save on his income tax liability?

Accepted Answer

A)  He won't save any money, since only the Roth IRA has tax deductions on contributions. 
B)  He won't save any money, since his income does not qualify for tax deductions for a qualified plan. 
C)  $750 
D)  $5000 
A)  He won't save any money, since only the Roth IRA has tax deductions on contributions. 
B)  He won't save any money, since his income does not qualify for tax deductions for a qualified plan. 
C)  $750 
D)  $5000

Question 19

With a ________, you, and usually your employer, pay funds into your retirement plan.

Accepted Answer

A)  deducted-benefit plan 
B)  noncontributory retirement plan 
C)  contributory retirement plan 
D)  none of the above 
A)  deducted-benefit plan 
B)  noncontributory retirement plan 
C)  contributory retirement plan 
D)  none of the above

Question 20

Which of the following benefits is not provided by Social Security?

Accepted Answer

A)  death 
B)  disability 
C)  education 
D)  health 
E)  retirement 
A)  death 
B)  disability 
C)  education 
D)  health 
E)  retirement

How are distributions/payouts/settlements taxed?

Frank is considering a new job. However he is concerned about his pension fund. He knows that ________ which is the requirement that he must work for his firm for a specified period of time prior to gaining ownership of the retirement contributions made by his employer has to be met first.

Which of the following statements about saving for college is not true?

By law, everyone must contribute the maximum amount into their 401(k) plans at work.

Contributions to a traditional IRA are always tax deductible.

What are the advantages and disadvantages of a defined-contribution plan like a 401k?

Social Security is a system where current workers' pay taxes that are used to pay current retirees' benefits. How is Social Security funded?

The Savers Tax Credit is designed to encourage low to moderate income workers contribute to their retirement accounts.

A Coverdell Education Savings Account works just like the Roth IRA for qualified education expenses, except with respect to contributions.

Social Security is a plan where current workers' contributions pay for current retiree's benefits.

A(n)________ is a pension plan in which you and your employer or your employer alone contribute funds directly to a retirement account set aside specifically for you.

Many older companies have changed from a defined-benefit plan to a(n) ________, which is a retirement plan where workers are credited with a percentage of their pay each year, plus a predetermined rate of interest.

Why does a tax-deferred retirement account accumulate more money than a taxable account, assuming the same amount is contributed every year and the accounts earn the same return every year?

Erica works for a company with a 401(k) plan. The company matches at $0.50 on the dollar the first 6% of the employee's salary contributed to the 401(k). If Erica earns $90,000 and contributes 12% of her salary, how much will the employer match be in dollars for the year?

Contributions to Roth IRAs are tax deductible.

According to the author, 401(K) plans are actually do it yourself variation of a profit-sharing/thrift plan.

Jose does not have a retirement plan at work. He currently earns $30,000 in salary and is in the 15% marginal tax bracket. If he contributes the maximum contribution of $5,000 to his traditional IRA, how much money will he save on his income tax liability?

With a ________, you, and usually your employer, pay funds into your retirement plan.

Which of the following benefits is not provided by Social Security?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 16: Retirement Planning

How are distributions/payouts/settlements taxed?

Frank is considering a new job. However he is concerned about his pension fund. He knows that ________ which is the requirement that he must work for his firm for a specified period of time prior to gaining ownership of the retirement contributions made by his employer has to be met first.

Which of the following statements about saving for college is not true?

By law, everyone must contribute the maximum amount into their 401(k) plans at work.

Contributions to a traditional IRA are always tax deductible.

What are the advantages and disadvantages of a defined-contribution plan like a 401k?

Social Security is a system where current workers' pay taxes that are used to pay current retirees' benefits. How is Social Security funded?

The Savers Tax Credit is designed to encourage low to moderate income workers contribute to their retirement accounts.

A Coverdell Education Savings Account works just like the Roth IRA for qualified education expenses, except with respect to contributions.

Social Security is a plan where current workers' contributions pay for current retiree's benefits.

A(n)________ is a pension plan in which you and your employer or your employer alone contribute funds directly to a retirement account set aside specifically for you.

Many older companies have changed from a defined-benefit plan to a(n) ________, which is a retirement plan where workers are credited with a percentage of their pay each year, plus a predetermined rate of interest.

Why does a tax-deferred retirement account accumulate more money than a taxable account, assuming the same amount is contributed every year and the accounts earn the same return every year?

Erica works for a company with a 401(k) plan. The company matches at $0.50 on the dollar the first 6% of the employee's salary contributed to the 401(k). If Erica earns $90,000 and contributes 12% of her salary, how much will the employer match be in dollars for the year?

Contributions to Roth IRAs are tax deductible.

According to the author, 401(K) plans are actually do it yourself variation of a profit-sharing/thrift plan.

Jose does not have a retirement plan at work. He currently earns $30,000 in salary and is in the 15% marginal tax bracket. If he contributes the maximum contribution of $5,000 to his traditional IRA, how much money will he save on his income tax liability?

With a ________, you, and usually your employer, pay funds into your retirement plan.

Which of the following benefits is not provided by Social Security?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters