Question 1

What are the major differences between the new IRAs and the traditional IRA?

Accepted Answer

All three of them are on a tax-deferred basis for individuals.They are separate from any employer plan.The traditional IRA can be fully tax-deductible,partially tax-deductible,or not tax-deductible,depending on the amount of your earnings and whether your spouse or you yourself have a company retirement plan.The Roth IRA does not have tax-deductible contributions,but rather has tax-free withdrawals upon retirement.The Coverdell Education Savings Account (Education IRA)is just like the Roth IRA except that contributions are limited to $2,000 annually per child for each child younger than 18.

Question 2

The big disadvantage with a defined-contribution plan is that you don't know in advance exactly how much money you can plan on for retirement income.

Accepted Answer

A) True 
 B)False  True

Question 3

With a lump-sum distribution of your retirement benefits,you must pay all of the income taxes on the entire amount up front.

Accepted Answer

A) True 
 B)False  True

Question 4

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 5

Andrew and Jackie have decided to select a joint and survivor annuity for retirement.Their main disadvantage is

Accepted Answer

A) the survivor not receiving a payment. 
B) inflation. 
C) running out of money. 
D) Andrew dying first. 
A) the survivor not receiving a payment. 
B) inflation. 
C) running out of money. 
D) Andrew dying first.

Question 6

Frank is considering a new job.However he is concerned about his pension fund.He knows that ________ which is the requirement that he must work for his firm for a specified period of time prior to gaining ownership of the retirement contributions made by his employer has to be met first.

Accepted Answer

A) tenuring 
B) certifying 
C) vesting 
D) validating 
E) none of the above 
A) tenuring 
B) certifying 
C) vesting 
D) validating 
E) none of the above

Question 7

Burt Reynolds has changed jobs.His last retirement plan's contributions depended on how well the company performed and he shared in the earnings.His present employer allows him ownership in the firm,although this is the riskiest plan.Burt's former plan was a(n)________ and his current plan is a(n)________.

Accepted Answer

A) ESOP;money purchase plan 
B) profit-sharing plan;ESOP 
C) ESOP;401(k) 
D) profit-sharing plan;thrift and savings plan 
E) ESOP;profit sharing plan 
A) ESOP;money purchase plan 
B) profit-sharing plan;ESOP 
C) ESOP;401(k) 
D) profit-sharing plan;thrift and savings plan 
E) ESOP;profit sharing plan

Question 8

Which of the following is a problem associated with many defined-benefits programs?

Accepted Answer

A) Lack of portability 
B) Failure to adjust for inflation once payments begin 
C) Many are unfunded. 
D) All of the above 
E) A and C only 
A) Lack of portability 
B) Failure to adjust for inflation once payments begin 
C) Many are unfunded. 
D) All of the above 
E) A and C only

Question 9

To avoid paying income taxes on your lump-sum distribution,you could roll it over into a qualified IRA.

Accepted Answer

A) True 
 B)False

Question 10

You are participating in a pension plan where the company's contributions vary from year to year,depending on the firm's performance.This is an example of a(n)

Accepted Answer

A) variable contribution plan. 
B) earnings establishment plan. 
C) performance retirement plan. 
D) profit-sharing plan. 
E) none of the above. 
A) variable contribution plan. 
B) earnings establishment plan. 
C) performance retirement plan. 
D) profit-sharing plan. 
E) none of the above.

Question 11

Your decision on what type of annuity to purchase will have a dramatic impact on the monthly payments you will receive upon retirement.

Accepted Answer

A) True 
 B)False

Question 12

Contributions to a traditional IRA are always tax deductible.

Accepted Answer

A) True 
 B)False

Question 13

A joint and survivor annuity provides payments for both you and your spouse.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following retirement plans is designed for small businesses?

Accepted Answer

A) SIMPLE plans 
B) SEP-IRA plans 
C) ESOP 
D) All of the above 
E) Only A and B 
A) SIMPLE plans 
B) SEP-IRA plans 
C) ESOP 
D) All of the above 
E) Only A and B

Question 15

Are retirement plans different for the self-employed and employees of small businesses? Do you have to work full-time to qualify for one?

Accepted Answer

Both part-time and full-time small busin

Question 16

Social Security is a health care,retirement,disability income,and life insurance plan.

Accepted Answer

A) True 
 B)False

Question 17

A(n)________ retirement plan is one in which the company will contribute shares of company stock into the employee's account in place of a cash contribution.The employee does well if the company stock appreciates in value,but can suffer dramatically if the stock depreciates in value.

Accepted Answer

A) 401(k)stock account 
B) 403(b)stock account 
C) ESOP 
D) stock repurchase plan 
A) 401(k)stock account 
B) 403(b)stock account 
C) ESOP 
D) stock repurchase plan

Question 18

The system of Social Security is based on young working people paying taxes to support older retired people.The dependency ratio is the number of workers to retirees.Forty years ago it was 16 workers for every one retiree.What will happen to this ratio by the year 2048?

Accepted Answer

A) It will reverse so that there will be more retirees than workers. 
B) It will increase,because there will be more young workers than retirees. 
C) It will decline to 2 workers for every 1 retiree. 
D) Nothing,since the ratio of young people to old people does not change. 
A) It will reverse so that there will be more retirees than workers. 
B) It will increase,because there will be more young workers than retirees. 
C) It will decline to 2 workers for every 1 retiree. 
D) Nothing,since the ratio of young people to old people does not change.

Question 19

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 20

The main advantage of the Roth IRA over the traditional IRA is the employer matching funds.

Accepted Answer

A) True 
 B)False

What are the major differences between the new IRAs and the traditional IRA?

The big disadvantage with a defined-contribution plan is that you don't know in advance exactly how much money you can plan on for retirement income.

With a lump-sum distribution of your retirement benefits,you must pay all of the income taxes on the entire amount up front.

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.

Andrew and Jackie have decided to select a joint and survivor annuity for retirement.Their main disadvantage is

Frank is considering a new job.However he is concerned about his pension fund.He knows that ________ which is the requirement that he must work for his firm for a specified period of time prior to gaining ownership of the retirement contributions made by his employer has to be met first.

Burt Reynolds has changed jobs.His last retirement plan's contributions depended on how well the company performed and he shared in the earnings.His present employer allows him ownership in the firm,although this is the riskiest plan.Burt's former plan was a(n) and his current plan is a(n).

Which of the following is a problem associated with many defined-benefits programs?

To avoid paying income taxes on your lump-sum distribution,you could roll it over into a qualified IRA.

You are participating in a pension plan where the company's contributions vary from year to year,depending on the firm's performance.This is an example of a(n)

Your decision on what type of annuity to purchase will have a dramatic impact on the monthly payments you will receive upon retirement.

Contributions to a traditional IRA are always tax deductible.

A joint and survivor annuity provides payments for both you and your spouse.

Which of the following retirement plans is designed for small businesses?

Are retirement plans different for the self-employed and employees of small businesses? Do you have to work full-time to qualify for one?

Social Security is a health care,retirement,disability income,and life insurance plan.

A(n)________ retirement plan is one in which the company will contribute shares of company stock into the employee's account in place of a cash contribution.The employee does well if the company stock appreciates in value,but can suffer dramatically if the stock depreciates in value.

The system of Social Security is based on young working people paying taxes to support older retired people.The dependency ratio is the number of workers to retirees.Forty years ago it was 16 workers for every one retiree.What will happen to this ratio by the year 2048?

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?

The main advantage of the Roth IRA over the traditional IRA is the employer matching funds.

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 Eventsfitting the Pieces Together

Filters

Exam 15: Retirement Planning

What are the major differences between the new IRAs and the traditional IRA?

The big disadvantage with a defined-contribution plan is that you don't know in advance exactly how much money you can plan on for retirement income.

With a lump-sum distribution of your retirement benefits,you must pay all of the income taxes on the entire amount up front.

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.

Andrew and Jackie have decided to select a joint and survivor annuity for retirement.Their main disadvantage is

Frank is considering a new job.However he is concerned about his pension fund.He knows that ________ which is the requirement that he must work for his firm for a specified period of time prior to gaining ownership of the retirement contributions made by his employer has to be met first.

Which of the following is a problem associated with many defined-benefits programs?

To avoid paying income taxes on your lump-sum distribution,you could roll it over into a qualified IRA.

You are participating in a pension plan where the company's contributions vary from year to year,depending on the firm's performance.This is an example of a(n)

Your decision on what type of annuity to purchase will have a dramatic impact on the monthly payments you will receive upon retirement.

Contributions to a traditional IRA are always tax deductible.

A joint and survivor annuity provides payments for both you and your spouse.

Which of the following retirement plans is designed for small businesses?

Are retirement plans different for the self-employed and employees of small businesses? Do you have to work full-time to qualify for one?

Social Security is a health care,retirement,disability income,and life insurance plan.

A(n)________ retirement plan is one in which the company will contribute shares of company stock into the employee's account in place of a cash contribution.The employee does well if the company stock appreciates in value,but can suffer dramatically if the stock depreciates in value.

The system of Social Security is based on young working people paying taxes to support older retired people.The dependency ratio is the number of workers to retirees.Forty years ago it was 16 workers for every one retiree.What will happen to this ratio by the year 2048?

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?

The main advantage of the Roth IRA over the traditional IRA is the employer matching funds.

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 Eventsfitting the Pieces Together

Filters