Question 1

Which of the following investments is least likely to be allowed with most defined-contribution plans?

Accepted Answer

A)  Stock mutual funds 
B)  Bond mutual funds 
C)  Money market funds 
D)  Individual corporate bonds 
A)  Stock mutual funds 
B)  Bond mutual funds 
C)  Money market funds 
D)  Individual corporate bonds

Question 2

Social Security is all of the following except

Accepted Answer

A)  a good starting point when planning for your retirement funding. 
B)  financed through working individuals and employers. 
C)  a government program that provides benefits to the elderly and the disabled. 
D)  a program that provides benefits that replace about 60% of a worker's annual income. 
A)  a good starting point when planning for your retirement funding. 
B)  financed through working individuals and employers. 
C)  a government program that provides benefits to the elderly and the disabled. 
D)  a program that provides benefits that replace about 60% of a worker's annual income.

Question 3

Which of the following plans is available to both firms with 10 or fewer employees and self-employed individuals?

Accepted Answer

A)  SEP plan 
B)  ESOP 
C)  Keogh plan 
D)  403(b) plan 
A)  SEP plan 
B)  ESOP 
C)  Keogh plan 
D)  403(b) plan

Question 4

If you have a claim to a portion of the money in an employer-sponsored retirement account,you are considered to be ________ the plan.

Accepted Answer

A)  committed to 
B)  permanent in 
C)  vested in 
D)  endowed in 
A)  committed to 
B)  permanent in 
C)  vested in 
D)  endowed in

Question 5

If your marginal tax rate while working is low,but you expect your marginal income tax rate to be high after you retire,you may be better off investing in a traditional IRA than in a Roth IRA.

Accepted Answer

A) True 
 B)False

Question 6

When you contribute to a defined-contribution retirement plan,your employer often puts in money too,and you are able to defer taxes on these contributions.

Accepted Answer

A) True 
 B)False

Question 7

Retirement fund withdrawals are usually taxed as ________ income.

Accepted Answer

A)  short-term capital gains 
B)  long-term capital gains 
C)  ordinary 
D)  tax-free 
A)  short-term capital gains 
B)  long-term capital gains 
C)  ordinary 
D)  tax-free

Question 8

The maximum amount that can be contributed to an IRA annually is adjusted periodically for inflation.

Accepted Answer

A) True 
 B)False

Question 9

A ________ is established to transfer assets tax-free from a company retirement plan.

Accepted Answer

A)  SEP 
B)  traditional IRA 
C)  rollover IRA 
D)  Keogh 
A)  SEP 
B)  traditional IRA 
C)  rollover IRA 
D)  Keogh

Question 10

When you leave an employer,your options with your 401(k)are all of the following except

Accepted Answer

A)  leave it with your former employer. 
B)  transfer it to your new employer. 
C)  transfer it to a rollover IRA. 
D)  withdraw it with no tax penalty if done in 90 days. 
A)  leave it with your former employer. 
B)  transfer it to your new employer. 
C)  transfer it to a rollover IRA. 
D)  withdraw it with no tax penalty if done in 90 days.

Question 11

An individual retirement account in which capital gains and earnings on your investments will not be taxed upon withdrawal at age 59 1/2 is a(n)________.

Accepted Answer

The answer of An individual retirement account in which capital...

Question 12

As you near retirement,you should

Accepted Answer

A)  reduce risk in your portfolio and move funds from risky investments to income generating investments. 
B)  move all of your invested funds to risk free corporate bonds. 
C)  move all of your invested funds to tax-free municipal bonds. 
D)  move a major portion of your invested funds to growth stocks since you will have to replace your income when you retire. 
A)  reduce risk in your portfolio and move funds from risky investments to income generating investments. 
B)  move all of your invested funds to risk free corporate bonds. 
C)  move all of your invested funds to tax-free municipal bonds. 
D)  move a major portion of your invested funds to growth stocks since you will have to replace your income when you retire.

Question 13

Contributions to a Roth IRA are not tax deductible initially and,therefore,very few people are interested in using a Roth IRA.

Accepted Answer

A) True 
 B)False

Question 14

The amount of income that you receive from Social Security when you retire is dependent on the number of years you earned income and your average level of income.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is not true of annuities?

Accepted Answer

A)  They can provide annual payments for life. 
B)  They provide no tax advantages. 
C)  They generally have high fees. 
D)  You can withdraw your investment as a lump sum. 
A)  They can provide annual payments for life. 
B)  They provide no tax advantages. 
C)  They generally have high fees. 
D)  You can withdraw your investment as a lump sum.

Question 16

A(n)________ annuity provides a specific return on your investment so you know how much money you will receive at a future point.

Accepted Answer

A)  guaranteed 
B)  fixed 
C)  variable 
D)  insured 
A)  guaranteed 
B)  fixed 
C)  variable 
D)  insured

Question 17

A financial contract that will provide annual payments over either a specified time period or a person's lifetime is a(n)________.

Accepted Answer

The answer of A financial contract that will provide annual...

Question 18

Name two types of retirement plans available to the self-employed.

Accepted Answer

Simplified Employee

Question 19

Use the following two columns of items to answer the matching questions below:
-ESOP

Accepted Answer

A) a defined contribution plan for small firms (1 - 10 employees) 
B) a retirement plan in which the employer contributes its own stock to the employee's retirement account 
C) a defined contribution plan in which the employer contributes to employee retirement accounts based on a specified profit formula 
D) a defined contribution plan that allows employees to contribute up to $18,000 per year in 2015 on a pre-tax basis 
A) a defined contribution plan for small firms (1 - 10 employees) 
B) a retirement plan in which the employer contributes its own stock to the employee's retirement account 
C) a defined contribution plan in which the employer contributes to employee retirement accounts based on a specified profit formula 
D) a defined contribution plan that allows employees to contribute up to $18,000 per year in 2015 on a pre-tax basis

Question 20

All defined-benefit plans have the same qualifications for determining when employees are vested.

Accepted Answer

A) True 
 B)False

Exam 19: Retirement Planning

Which of the following investments is least likely to be allowed with most defined-contribution plans?

Social Security is all of the following except

Which of the following plans is available to both firms with 10 or fewer employees and self-employed individuals?

If you have a claim to a portion of the money in an employer-sponsored retirement account,you are considered to be ________ the plan.

If your marginal tax rate while working is low,but you expect your marginal income tax rate to be high after you retire,you may be better off investing in a traditional IRA than in a Roth IRA.

When you contribute to a defined-contribution retirement plan,your employer often puts in money too,and you are able to defer taxes on these contributions.

Retirement fund withdrawals are usually taxed as ________ income.

The maximum amount that can be contributed to an IRA annually is adjusted periodically for inflation.

A ________ is established to transfer assets tax-free from a company retirement plan.

When you leave an employer,your options with your 401(k)are all of the following except

An individual retirement account in which capital gains and earnings on your investments will not be taxed upon withdrawal at age 59 1/2 is a(n)________.

As you near retirement,you should

Contributions to a Roth IRA are not tax deductible initially and,therefore,very few people are interested in using a Roth IRA.

The amount of income that you receive from Social Security when you retire is dependent on the number of years you earned income and your average level of income.

Which of the following statements is not true of annuities?

A(n)________ annuity provides a specific return on your investment so you know how much money you will receive at a future point.

A financial contract that will provide annual payments over either a specified time period or a person's lifetime is a(n)________.

Name two types of retirement plans available to the self-employed.

Use the following two columns of items to answer the matching questions below: -ESOP

All defined-benefit plans have the same qualifications for determining when employees are vested.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Estate Planning

Integrating the Components of a Financial Plan

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