Exam 14: Planning for Retirement

Lillian has a defined benefit plan that promises an annual retirement benefit based on 2 percent of her final 3-year average annual salary for each year of service.At retirement Lillian has 15 years of service and an average salary over the last 3 years of $65,000.What will her annual benefit be?

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. -For most people,participation in the Social Security system is [voluntary | mandatory].

The employers are cutting back on traditional pension plans and are offering 401(k)plans.

The purpose of the Social Security retirement program is to:

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

Early withdrawal of funds from an annuity without a bailout provision may result in IRS penalties and:

Annuities may guarantee proceeds for a specific period or for a specific amount.

Attractive features of a 401(k)plan can include:

To be eligible for Social Security retirement benefits,30 quarters of covered employment are generally needed.

Bill has worked for White Drywall for 4 years.During this period,White Drywall has contributed $25,000 to his retirement plan.Assuming the company uses graded vesting,how much will Bill be able to roll into an IRA if he leaves White Drywall at the end of 4 years?

Even the best retirement plan needs to be reviewed every few years.

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. -In a Roth 401(k),contributions [are | are not] tax deductible.

Which of the following is a tax characteristic of qualified retirement plans?

For most workers,participation in the Social Security system is mandatory.

The cost of a life annuity is greater for females than it is for males.

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 Social Security administration provides estimates of retirement benefits one could expect to receive in [current | future] dollars.

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

Dr.Johnson is surgeon at University Hospital.She will pay _____ taxes on all of her $170,000 salary.

Upon retirement,married couples automatically receive 1.5 times the higher earning spouse's Social Security benefit.

The first step in retirement planning is to: