Question 1

What does the term 'self directed' mean concerning retirement accounts?

Accepted Answer

The term self directed means that the individual account holder will make the investment decisions for their retirement monies.For employer sponsored plans,the employer will select a Financial Institution like a Mutual Fund company to be the plan Administrator.Typically there will be a selection of various mutual fund categories available to meet the requirements of a diverse group of employees.It is the employee who chooses which fund or funds they feel are best suited to their individual needs,hence they are 'self directing' their retirement account.
With an individual retirement account,the individual makes all of the choices themselves.They choose a Financial Institution to act as the Plan Administrator and the individual chooses whatever investments they want for their account.

Question 2

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  True

Question 3

If your pension fund contained a provision that allowed employees who were leaving the company to retain and transfer any pension benefits earned to another pension plan,it would be said to have

Accepted Answer

A)  transference. 
B)  releasability. 
C)  transportance. 
D)  portability. 
E)  none of the above. 
A)  transference. 
B)  releasability. 
C)  transportance. 
D)  portability. 
E)  none of the above. D

Question 4

June and Ward Cleaver are married.June works as an accountant and contributes to a 401(k)plan at work.Ward is a web page designer and works for himself from their home.What type of retirement plan would be an option for Ward?

Accepted Answer

A)  Keogh plan 
B)  SEP-IRA plan 
C)  Individual IRA 
D)  All of the above are correct. 
E)  Only A and C are correct. 
A)  Keogh plan 
B)  SEP-IRA plan 
C)  Individual IRA 
D)  All of the above are correct. 
E)  Only A and C are correct.

Question 5

Relative to insurance,when a payout arrangement is made in which one receives all benefits in a single payment,this is called a

Accepted Answer

A)  cash payout. 
B)  lump-sum option. 
C)  single distribution plan. 
D)  point plan. 
E)  none of the above. 
A)  cash payout. 
B)  lump-sum option. 
C)  single distribution plan. 
D)  point plan. 
E)  none of the above.

Question 6

A ________ option provides payments over the life of both you and your spouse no matter how long you live.

Accepted Answer

A)  single life annuity 
B)  lump sum annuity 
C)  joint and survivor annuity 
D)  annuity for life 
E)  combination annuity 
A)  single life annuity 
B)  lump sum annuity 
C)  joint and survivor annuity 
D)  annuity for life 
E)  combination annuity

Question 7

Social Security is a health care,retirement,disability income,and life insurance plan.

Accepted Answer

A) True 
 B)False

Question 8

You have determined that you will need to accumulate $1,000,000 in your retirement account in order to cover your inflation-adjusted shortfall.Which of the following is closest to the amount of money you would need to put into a tax-deferred retirement account every year if you plan on retiring in 40 years? Assume an 8% average return on this account,and that it is empty today.

Accepted Answer

A)  $1,458 
B)  $3,860 
C)  $5,957 
D)  $8,444 
A)  $1,458 
B)  $3,860 
C)  $5,957 
D)  $8,444

Question 9

Fred and Carlie want to save some money for a down payment on a house.They figure it will take at least 10 years to save up enough money.Which of the following would be the best way for them to save this money?

Accepted Answer

A)  Traditional IRA 
B)  Roth IRA 
C)  529 Savings Plan 
D)  Keogh Plan 
A)  Traditional IRA 
B)  Roth IRA 
C)  529 Savings Plan 
D)  Keogh Plan

Question 10

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 $5,500 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)  $825 
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)  $825 
D)  $5000

Question 11

According to the Employee Benefit Research Institute,one-third of U.S.households between the ages of 30 and 59 won't have enough money for retirement,even if they work until they're 70.

Accepted Answer

A) True 
 B)False

Question 12

The size of your Social Security benefits are determined by your number of years of earnings,your average level of earnings,and an adjustment for inflation.

Accepted Answer

A) True 
 B)False

Question 13

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 14

Anyone can open up an IRA account but not everyone may get tax-advantages from it because there are income limitations.

Accepted Answer

A) True 
 B)False

Question 15

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 16

The Federal Insurance Contributions Act isn't an investment,but rather a mandatory insurance plan that one pays into through salary deductions.

Accepted Answer

A) True 
 B)False

Question 17

Lori Watts favors the traditional IRA over the Roth IRA.What advantage does the traditional IRA have over the Roth?

Accepted Answer

A)  The earnings are tax-exempt, unlike a Roth IRA. 
B)  Contributions are likely to be fully or partially tax deductible. 
C)  It saves tax money for education. 
D)  There are no penalties for early withdrawals. 
A)  The earnings are tax-exempt, unlike a Roth IRA. 
B)  Contributions are likely to be fully or partially tax deductible. 
C)  It saves tax money for education. 
D)  There are no penalties for early withdrawals.

Question 18

Valerie works as a free-lance artist.Her financial advisor suggested she establish a Keogh plan for her retirement.Is this an appropriate suggestion for her?

Accepted Answer

A)  Yes 
B)  No 
A)  Yes 
B)  No

Question 19

Your company pays retirement benefits to current retirees out of current earnings,on a pay-as-you-go basis.This is an example of a(n)

Accepted Answer

A)  unfunded pension plan. 
B)  funded pension plan. 
C)  cash balance plan. 
D)  none of the above. 
A)  unfunded pension plan. 
B)  funded pension plan. 
C)  cash balance plan. 
D)  none of the above.

Question 20

Why would it be a good idea to hire a Certified Financial Planner before you retire?

Accepted Answer

Many people will retire with a substanti

What does the term 'self directed' mean concerning retirement accounts?

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

If your pension fund contained a provision that allowed employees who were leaving the company to retain and transfer any pension benefits earned to another pension plan,it would be said to have

June and Ward Cleaver are married.June works as an accountant and contributes to a 401(k)plan at work.Ward is a web page designer and works for himself from their home.What type of retirement plan would be an option for Ward?

Relative to insurance,when a payout arrangement is made in which one receives all benefits in a single payment,this is called a

A ________ option provides payments over the life of both you and your spouse no matter how long you live.

Social Security is a health care,retirement,disability income,and life insurance plan.

Fred and Carlie want to save some money for a down payment on a house.They figure it will take at least 10 years to save up enough money.Which of the following would be the best way for them to save this money?

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 $5,500 to his traditional IRA,how much money will he save on his income tax liability?

According to the Employee Benefit Research Institute,one-third of U.S.households between the ages of 30 and 59 won't have enough money for retirement,even if they work until they're 70.

The size of your Social Security benefits are determined by your number of years of earnings,your average level of earnings,and an adjustment for inflation.

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?

Anyone can open up an IRA account but not everyone may get tax-advantages from it because there are income limitations.

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.

The Federal Insurance Contributions Act isn't an investment,but rather a mandatory insurance plan that one pays into through salary deductions.

Lori Watts favors the traditional IRA over the Roth IRA.What advantage does the traditional IRA have over the Roth?

Valerie works as a free-lance artist.Her financial advisor suggested she establish a Keogh plan for her retirement.Is this an appropriate suggestion for her?

Your company pays retirement benefits to current retirees out of current earnings,on a pay-as-you-go basis.This is an example of a(n)

Why would it be a good idea to hire a Certified Financial Planner before you retire?

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

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

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 15: Retirement Planning

What does the term 'self directed' mean concerning retirement accounts?

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

If your pension fund contained a provision that allowed employees who were leaving the company to retain and transfer any pension benefits earned to another pension plan,it would be said to have

June and Ward Cleaver are married.June works as an accountant and contributes to a 401(k)plan at work.Ward is a web page designer and works for himself from their home.What type of retirement plan would be an option for Ward?

Relative to insurance,when a payout arrangement is made in which one receives all benefits in a single payment,this is called a

A ________ option provides payments over the life of both you and your spouse no matter how long you live.

Social Security is a health care,retirement,disability income,and life insurance plan.

Fred and Carlie want to save some money for a down payment on a house.They figure it will take at least 10 years to save up enough money.Which of the following would be the best way for them to save this money?

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 $5,500 to his traditional IRA,how much money will he save on his income tax liability?

According to the Employee Benefit Research Institute,one-third of U.S.households between the ages of 30 and 59 won't have enough money for retirement,even if they work until they're 70.

The size of your Social Security benefits are determined by your number of years of earnings,your average level of earnings,and an adjustment for inflation.

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?

Anyone can open up an IRA account but not everyone may get tax-advantages from it because there are income limitations.

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.

The Federal Insurance Contributions Act isn't an investment,but rather a mandatory insurance plan that one pays into through salary deductions.

Lori Watts favors the traditional IRA over the Roth IRA.What advantage does the traditional IRA have over the Roth?

Valerie works as a free-lance artist.Her financial advisor suggested she establish a Keogh plan for her retirement.Is this an appropriate suggestion for her?

Your company pays retirement benefits to current retirees out of current earnings,on a pay-as-you-go basis.This is an example of a(n)

Why would it be a good idea to hire a Certified Financial Planner before you retire?

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

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

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