Exam 14: Planning for Retirement

Self-directed retirement accounts aimed at self-employed persons include

Whether or not your social security benefits will be subject to income taxes depends on how much other income you received during the year.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -You can offset the effects of earning a lower rate of return by [?increasing the amount you invest each year | ?shortening the period over which you build up your retirement account].

Younger persons are able to make larger contributions to IRAs than persons 50 and over.

Sally and Patrick are married with 4 young children.Patrick stays at home with the kids while Sally works as CEO of a small manufacturing firm earning $105,000 annually.Sally is covered by a 401(k)plan at work,but they would like to maximize their IRA contributions as well.Which of the following are true assuming their AGI is $105,897?

Keogh and SEP plans provide tax-deferred methods for the self-employed to save for their retirement.

You would most likely purchase an annuity from a bank.

Roth IRAs are the only IRAs that have the potential to produce tax-free earnings.

403(b)and 457 plans are similar to 401(k)plans,but they are for employees of public,non-profit organizations.

You will receive the largest monthly payment under an annuity contract when the selected payment option is the

The best retirement investment is fixed income securities such as CDs and Treasury notes.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Under a defined contribution pension plan,an employee [is | is not] able to estimate what his pension payment would be upon retirement.

Traditional defined benefit plans are better suited than cash-balance plans for a mobile workforce.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The most common investment amount of a single premium annuity contract is [$5,000 | $10,000].

The two ways to buy annuities are single premium and

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The earnings test [applies | does not apply] to retirees at age 67.

Eric works for a company with a defined contribution benefit pension plan.He will retire in ten years (at age 65)and expects his salary to be $100,000 in his last year of work.Social Security should pay him $1,325 per month at that time.If he needs 80 percent of his income to maintain his standard of living upon retirement,how much annual income will he need from his employer's plan and from his own planning when he retires? (Show all work.)

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -A self-employed person could set up a [Keogh | 403(b)] retirement plan.

The period during which premiums are paid for the purchase of an annuity is called the

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -[Social Security | 401k] is the single largest source of income for the average U.S.retiree.