Question 1

The only difference between a defined-benefit plan and a defined-contribution retirement plan is the tax deduction for the defined-contribution plan.

Accepted Answer

A) True 
 B)False

Question 2

An employee's Social Security contributions are invested in a general fund account and will be made available for the employee at retirement.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Two of the most important considerations when saving for retirement is the time you have to save and the return you earn on your savings.

Accepted Answer

A) True 
 B)False

Question 5

What investment goals should a person have when determining where to put their 401k monies in their account?

Accepted Answer

For the younger workers under the age of

Question 6

A ________ is defined by the fact that your employer provides all the funds for the retirement plan,without any contribution from you.

Accepted Answer

A)  defined-benefit plan 
B)  noncontributory retirement plan 
C)  contributory retirement plan 
D)  portable 
E)  none of the above 
A)  defined-benefit plan 
B)  noncontributory retirement plan 
C)  contributory retirement plan 
D)  portable 
E)  none of the above

Question 7

A disadvantage of the annuity for life plan is that the payments stop when you die,so you can't pass the money on to your heirs.

Accepted Answer

A) True 
 B)False

Question 8

With a traditional IRA and a Roth IRA,you can make withdrawals at any time with no penalties.

Accepted Answer

A) True 
 B)False

Question 9

Richard Harris wants to elect the single life annuity option for retirement.His mother lived to age 92 and his dad lived to be 89.This annuity will pay Richard a set monthly payment for as long as he lives.What possible disadvantage might he face?

Accepted Answer

A)  There will be no inflation protection. 
B)  There will be no flexibility for withdrawals in case of emergencies. 
C)  The balance of the money left over upon death will not be passed on to his heirs. 
D)  All of the above are correct. 
E)  Only A and C are correct. 
A)  There will be no inflation protection. 
B)  There will be no flexibility for withdrawals in case of emergencies. 
C)  The balance of the money left over upon death will not be passed on to his heirs. 
D)  All of the above are correct. 
E)  Only A and C are correct.

Question 10

Today,there are roughly 18,000 publicly traded stock and bond funds,and for many workers,the prospect of choosing among them is paralyzing.

Accepted Answer

A) True 
 B)False

Question 11

Vanguard and Fidelity are two low-cost mutual fund families that offer Roth IRAs.Stick to them or another mutual fund family that features low costs and expenses.

Accepted Answer

A) True 
 B)False

Question 12

Alicia works two jobs and still makes very little income.Why is the Saver's Tax Credit a good idea for her?

Accepted Answer

A)  Because it will possibly increase her tax refund 
B)  Because it will possibly reduce the amount of income tax that she owes 
C)  It allows her to offset part of the first $2,000 that she can contribute to an IRA or a 401(k) plan. 
D)  All of the above are correct. 
E)  Only A and B are correct. 
A)  Because it will possibly increase her tax refund 
B)  Because it will possibly reduce the amount of income tax that she owes 
C)  It allows her to offset part of the first $2,000 that she can contribute to an IRA or a 401(k) plan. 
D)  All of the above are correct. 
E)  Only A and B are correct.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The Keogh plan is a retirement plan for individuals who work for large multinational corporations.

Accepted Answer

A) True 
 B)False

Question 15

Today,there are roughly ________ publicly traded stock and bond funds,and for many workers,the prospect of choosing among them is paralyzing.

Accepted Answer

A)  5,000 
B)  8,000 
C)  18,000 
D)  23,000 
A)  5,000 
B)  8,000 
C)  18,000 
D)  23,000

Question 16

Defined-benefit pension plans are generally ________ and they lack ________.

Accepted Answer

A)  contributory; divesting 
B)  noncontributory; divesting 
C)  contributory; portability 
D)  noncontributory; portability 
E)  vested; portability 
A)  contributory; divesting 
B)  noncontributory; divesting 
C)  contributory; portability 
D)  noncontributory; portability 
E)  vested; portability

Question 17

You want to start an Coverdell Education Savings Account for your child.Suppose that you contribute $500 each year to this account for 18 years,starting when he or she is born.If you can earn 8% on the deposits,how much will be on deposit at the end of the 18th year?

Accepted Answer

A)  $4,306.38 
B)  $17,581.05 
C)  $18,725.12 
D)  $3,682.89 
E)  none of the above 
A)  $4,306.38 
B)  $17,581.05 
C)  $18,725.12 
D)  $3,682.89 
E)  none of the above

Question 18

Alex works for a company with a 401(k)plan.He currently earns $80,000 in gross salary and contributes 8% of his gross salary into his 401(k)account.If his marginal tax rate is 33%,how much income tax liability is he saving by participating in his 401(k)?

Accepted Answer

A)  $6,400 
B)  $2,112 
C)  $6,000 
D)  $16,800 
A)  $6,400 
B)  $2,112 
C)  $6,000 
D)  $16,800

Question 19

You and your spouse both have good retirement plans through work and you both receive good Social Security checks based on your own incomes.If your goal is to maximize the size of your annuity check every month,which option should you choose?

Accepted Answer

A)  Single Life Annuity 
B)  Annuity for Life or Certain Period 
C)  Joint and Survivor Annuity 
D)  All annuities have equal payment amounts, so it doesn't matter which you choose. 
A)  Single Life Annuity 
B)  Annuity for Life or Certain Period 
C)  Joint and Survivor Annuity 
D)  All annuities have equal payment amounts, so it doesn't matter which you choose.

Question 20

It is a good idea to start saving for retirement as early as possible to take advantage of compounding returns on your savings.

Accepted Answer

A) True 
 B)False

The only difference between a defined-benefit plan and a defined-contribution retirement plan is the tax deduction for the defined-contribution plan.

An employee's Social Security contributions are invested in a general fund account and will be made available for the employee at retirement.

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.

Two of the most important considerations when saving for retirement is the time you have to save and the return you earn on your savings.

What investment goals should a person have when determining where to put their 401k monies in their account?

A ________ is defined by the fact that your employer provides all the funds for the retirement plan,without any contribution from you.

A disadvantage of the annuity for life plan is that the payments stop when you die,so you can't pass the money on to your heirs.

With a traditional IRA and a Roth IRA,you can make withdrawals at any time with no penalties.

Richard Harris wants to elect the single life annuity option for retirement.His mother lived to age 92 and his dad lived to be 89.This annuity will pay Richard a set monthly payment for as long as he lives.What possible disadvantage might he face?

Today,there are roughly 18,000 publicly traded stock and bond funds,and for many workers,the prospect of choosing among them is paralyzing.

Vanguard and Fidelity are two low-cost mutual fund families that offer Roth IRAs.Stick to them or another mutual fund family that features low costs and expenses.

Alicia works two jobs and still makes very little income.Why is the Saver's Tax Credit a good idea for her?

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

The Keogh plan is a retirement plan for individuals who work for large multinational corporations.

Today,there are roughly ________ publicly traded stock and bond funds,and for many workers,the prospect of choosing among them is paralyzing.

Defined-benefit pension plans are generally and they lack .

You want to start an Coverdell Education Savings Account for your child.Suppose that you contribute $500 each year to this account for 18 years,starting when he or she is born.If you can earn 8% on the deposits,how much will be on deposit at the end of the 18th year?

Alex works for a company with a 401(k)plan.He currently earns $80,000 in gross salary and contributes 8% of his gross salary into his 401(k)account.If his marginal tax rate is 33%,how much income tax liability is he saving by participating in his 401(k)?

You and your spouse both have good retirement plans through work and you both receive good Social Security checks based on your own incomes.If your goal is to maximize the size of your annuity check every month,which option should you choose?

It is a good idea to start saving for retirement as early as possible to take advantage of compounding returns on your savings.

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

The only difference between a defined-benefit plan and a defined-contribution retirement plan is the tax deduction for the defined-contribution plan.

An employee's Social Security contributions are invested in a general fund account and will be made available for the employee at retirement.

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.

Two of the most important considerations when saving for retirement is the time you have to save and the return you earn on your savings.

What investment goals should a person have when determining where to put their 401k monies in their account?

A ________ is defined by the fact that your employer provides all the funds for the retirement plan,without any contribution from you.

A disadvantage of the annuity for life plan is that the payments stop when you die,so you can't pass the money on to your heirs.

With a traditional IRA and a Roth IRA,you can make withdrawals at any time with no penalties.

Richard Harris wants to elect the single life annuity option for retirement.His mother lived to age 92 and his dad lived to be 89.This annuity will pay Richard a set monthly payment for as long as he lives.What possible disadvantage might he face?

Today,there are roughly 18,000 publicly traded stock and bond funds,and for many workers,the prospect of choosing among them is paralyzing.

Vanguard and Fidelity are two low-cost mutual fund families that offer Roth IRAs.Stick to them or another mutual fund family that features low costs and expenses.

Alicia works two jobs and still makes very little income.Why is the Saver's Tax Credit a good idea for her?

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

The Keogh plan is a retirement plan for individuals who work for large multinational corporations.

Today,there are roughly ________ publicly traded stock and bond funds,and for many workers,the prospect of choosing among them is paralyzing.

Defined-benefit pension plans are generally ________ and they lack ________.

You want to start an Coverdell Education Savings Account for your child.Suppose that you contribute $500 each year to this account for 18 years,starting when he or she is born.If you can earn 8% on the deposits,how much will be on deposit at the end of the 18th year?

Alex works for a company with a 401(k)plan.He currently earns $80,000 in gross salary and contributes 8% of his gross salary into his 401(k)account.If his marginal tax rate is 33%,how much income tax liability is he saving by participating in his 401(k)?

You and your spouse both have good retirement plans through work and you both receive good Social Security checks based on your own incomes.If your goal is to maximize the size of your annuity check every month,which option should you choose?

It is a good idea to start saving for retirement as early as possible to take advantage of compounding returns on your savings.

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

Defined-benefit pension plans are generally and they lack .