Question 1

Profit-sharing plans allow flexible employer contributions to the plans.

Accepted Answer

A) True 
 B)False

Question 2

The wage base on which Social Security tax is computed __________. ​

Accepted Answer

A) increases each year 
B) remains the same for long periods of time 
C) after adjusting for inflation 
D) increases by the amount of the employer's contribution 
A) increases each year 
B) remains the same for long periods of time 
C) after adjusting for inflation 
D) increases by the amount of the employer's contribution

Question 3

In which of the following procedures does vesting take place gradually over the first six years of employment?

Accepted Answer

A) Cliff vesting 
B) Contributory vesting 
C) Self-directed schedule 
D) Graded schedule 
E) Maximum vesting 
A) Cliff vesting 
B) Contributory vesting 
C) Self-directed schedule 
D) Graded schedule 
E) Maximum vesting

Question 4

A common mistake people tend to make in retirement planning is:

Accepted Answer

A) starting too early. 
B) saving too little. 
C) investing too aggressively. 
D) planning too early. 
E) spending too little. 
A) starting too early. 
B) saving too little. 
C) investing too aggressively. 
D) planning too early. 
E) spending too little.

Question 5

The third step in retirement planning is to formulate an investment program.

Accepted Answer

A) True 
 B)False

Question 6

Kurt receives Social Security benefits and also received $55,000 in wages during the year.His Social Security benefits are __________. ​

Accepted Answer

A) totally taxable 
B) totally deductible 
C) partially taxable 
D) partially deductible 
A) totally taxable 
B) totally deductible 
C) partially taxable 
D) partially deductible

Question 7

Which of the following types of retirement plans is becoming less common?

Accepted Answer

A) A traditional defined contribution plan 
B) A traditional defined benefit plan 
C) A cash balance plan 
D) A 401(k)plan 
E) A Keogh plan 
A) A traditional defined contribution plan 
B) A traditional defined benefit plan 
C) A cash balance plan 
D) A 401(k)plan 
E) A Keogh plan

Question 8

Danielle puts 8 percent of her paycheck in a 401(k)plan administered by her employer.Danielle earns $55,000 per year and is in the 28 percent tax category.What annual tax savings does she get from her contribution? If her employer matches contributions on the first 5 percent of her salary dollar for dollar and the next 3 percent with 50 cents for every dollar,how much will her employer put into her account this year? (Show all work.)

Accepted Answer

Contribution = 0 08 × $55,000 = $4,400 T

Question 9

An annual contribution of $3,000 to a retirement account that earns 6 percent will be worth approximately _____ in 20 years.(Use the table of future value annuity factors or a financial calculator.Round off to the nearest tens place.)

Accepted Answer

A) $60,000 
B) $96,780 
C) $100,000 
D) $110,360 
E) $192,600 
A) $60,000 
B) $96,780 
C) $100,000 
D) $110,360 
E) $192,600

Question 10

Harry starts receiving reduced retirement benefits at age 62.These benefits __________. ​

Accepted Answer

A) increase when he reaches the normal retirement age 
B) are not subject to federal income taxes 
C) are deducted from the future benefits he will receive after age 67 
D) increase the tax deductions available to him 
A) increase when he reaches the normal retirement age 
B) are not subject to federal income taxes 
C) are deducted from the future benefits he will receive after age 67 
D) increase the tax deductions available to him

Question 11

Jacque Solis,a 38-year-old,is leaving her current job and would like to take a long vacation before a new job.She has $58,000 in a qualified plan that she would like to live on during this period.If she is in a 25 percent marginal tax bracket,how much will she have left after paying taxes and penalties?

Accepted Answer

A) $58,000 
B) $43,500 
C) $37,700 
D) $29,000 
E) $14,500 
A) $58,000 
B) $43,500 
C) $37,700 
D) $29,000 
E) $14,500

Question 12

Henry has a defined benefit plan that promises an annual retirement benefit based on 2.5 percent 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) $28,500 
E) $15,200 
A) $95,000 
B) $60,500 
C) $49,875 
D) $28,500 
E) $15,200

Question 13

In the year 2027,a person will have to be a minimum of _____ years to be able to retire with full social benefits.

Accepted Answer

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

Question 14

Single premium annuities result in a lump-sum payment of benefits.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a requirement for an individual to qualify for full retirement benefits under the Social Security system?

Accepted Answer

A) The individual must be employed in a job covered by Social Security for at least 60 quarters,or 15 years,which need not be consecutive. 
B) The individual must be employed in a job covered by Social Security for at least 50 quarters,or 12.5 years,which need not be consecutive. 
C) The individual must be employed in a job covered by Social Security for at least 50 consecutive quarters,or 12.5 years. 
D) The individual must be employed in a job covered by Social Security for at least 40 quarters,or 10 years,which need not be consecutive. 
E) The individual must be employed in a job covered by Social Security for at least 40 consecutive quarters,or 10 years. 
A) The individual must be employed in a job covered by Social Security for at least 60 quarters,or 15 years,which need not be consecutive. 
B) The individual must be employed in a job covered by Social Security for at least 50 quarters,or 12.5 years,which need not be consecutive. 
C) The individual must be employed in a job covered by Social Security for at least 50 consecutive quarters,or 12.5 years. 
D) The individual must be employed in a job covered by Social Security for at least 40 quarters,or 10 years,which need not be consecutive. 
E) The individual must be employed in a job covered by Social Security for at least 40 consecutive quarters,or 10 years.

Question 16

Social Security benefits (cash benefits)are funded by:

Accepted Answer

A) voluntary contributions from the government,employers,and self-employed people. 
B) compulsory contributions from employees,employers,and self-employed people. 
C) state and income tax. 
D) charitable contributions from the federal government. 
E) federal income taxes. 
A) voluntary contributions from the government,employers,and self-employed people. 
B) compulsory contributions from employees,employers,and self-employed people. 
C) state and income tax. 
D) charitable contributions from the federal government. 
E) federal income taxes.

Question 17

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

Accepted Answer

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

Question 18

Jamie has worked for ABC Printing for 5 years.During this period,ABC Printing has contributed $25,000 to her noncontributory retirement plan.Assuming ABC uses cliff vesting,the longest period allowed,how much will Jamie be able to roll into an individual retirement account (IRA)if she leaves ABC Printing?

Accepted Answer

A) $0 
B) $5,000 
C) $10,000 
D) $20,000 
E) $25,000 
A) $0 
B) $5,000 
C) $10,000 
D) $20,000 
E) $25,000

Question 19

If an annuity plan is designed so that the monthly payment is adjusted by the actual investment experience of the insurer,it is:

Accepted Answer

A) a guaranteed-minimum annuity. 
B) an equity annuity. 
C) a variable annuity. 
D) an uncertain annuity. 
E) a temporary annuity. 
A) a guaranteed-minimum annuity. 
B) an equity annuity. 
C) a variable annuity. 
D) an uncertain annuity. 
E) a temporary annuity.

Question 20

Most people are too conservative when investing their retirement funds.

Accepted Answer

A) True 
 B)False

Profit-sharing plans allow flexible employer contributions to the plans.

The wage base on which Social Security tax is computed __________.

In which of the following procedures does vesting take place gradually over the first six years of employment?

A common mistake people tend to make in retirement planning is:

The third step in retirement planning is to formulate an investment program.

Kurt receives Social Security benefits and also received $55,000 in wages during the year.His Social Security benefits are __________.

Which of the following types of retirement plans is becoming less common?

An annual contribution of $3,000 to a retirement account that earns 6 percent will be worth approximately _____ in 20 years.(Use the table of future value annuity factors or a financial calculator.Round off to the nearest tens place.)

Harry starts receiving reduced retirement benefits at age 62.These benefits __________.

Henry has a defined benefit plan that promises an annual retirement benefit based on 2.5 percent 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 _____.

In the year 2027,a person will have to be a minimum of _____ years to be able to retire with full social benefits.

Single premium annuities result in a lump-sum payment of benefits.

Which of the following is a requirement for an individual to qualify for full retirement benefits under the Social Security system?

Social Security benefits (cash benefits)are funded by:

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

If an annuity plan is designed so that the monthly payment is adjusted by the actual investment experience of the insurer,it is:

Most people are too conservative when investing their retirement funds.

Understanding the Financial Planning Process

Using Financial Statements and Budgets

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, ETFS and Real Estate

Preserving Your Estate

Filters

Exam 14: Planning for Retirement

Profit-sharing plans allow flexible employer contributions to the plans.

The wage base on which Social Security tax is computed __________. ​

In which of the following procedures does vesting take place gradually over the first six years of employment?

A common mistake people tend to make in retirement planning is:

The third step in retirement planning is to formulate an investment program.

Kurt receives Social Security benefits and also received $55,000 in wages during the year.His Social Security benefits are __________. ​

Which of the following types of retirement plans is becoming less common?

An annual contribution of $3,000 to a retirement account that earns 6 percent will be worth approximately _____ in 20 years.(Use the table of future value annuity factors or a financial calculator.Round off to the nearest tens place.)

Harry starts receiving reduced retirement benefits at age 62.These benefits __________. ​

In the year 2027,a person will have to be a minimum of _____ years to be able to retire with full social benefits.

Single premium annuities result in a lump-sum payment of benefits.

Which of the following is a requirement for an individual to qualify for full retirement benefits under the Social Security system?

Social Security benefits (cash benefits)are funded by:

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

If an annuity plan is designed so that the monthly payment is adjusted by the actual investment experience of the insurer,it is:

Most people are too conservative when investing their retirement funds.

Understanding the Financial Planning Process

Using Financial Statements and Budgets

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, ETFS and Real Estate

Preserving Your Estate

Filters

The wage base on which Social Security tax is computed __________.

Kurt receives Social Security benefits and also received $55,000 in wages during the year.His Social Security benefits are __________.

Harry starts receiving reduced retirement benefits at age 62.These benefits __________.