Question 1

Important factors in determining the amount received from a defined-benefit pension plan are number of years worked in the firm and average income.

Accepted Answer

A) True 
 B)False

Question 2

Lina earns $135,000 a year,while Christine earns $125,000 a year.If both are employees and the Social Security wage base is $117,000,Lina pays ____ Social Security taxes than (as) Christine.

Accepted Answer

A) significantly higher 
B) slightly higher 
C) slightly lower 
D) the same

Question 3

The IRS requires that withdrawals from traditional IRAs begin no later than age 65.

Accepted Answer

A) True 
 B)False

Question 4

Only the wealthy have an estate.

Accepted Answer

A) True 
 B)False

Question 5

The goal of Monte Carlo Analysis is to find an optimal portfolio of assets that will have the highest expected returns for that level of risk.

Accepted Answer

A) True 
 B)False

Question 6

Liz,a university student,earned $4,500 working as a waitress during the summer and over semester break last year.How many Social Security credits did Liz earn for Social Security coverage?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4

Question 7

An unmarried domestic partner usually has no legal claim on the probate estate of their deceased partner who died without naming them in the will.

Accepted Answer

A) True 
 B)False

Question 8

You can name a contingent beneficiary on an asset in case the beneficiary dies before you do.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements about survivor's and disability benefits under defined-benefit plans is false?

Accepted Answer

A) Most employer-sponsored retirement plans provide survivor's benefits. 
B) If spousal benefits are waived, the worker's retirement benefit will be higher. 
C) The covered worker can cancel spousal benefits only if the spouse consents in writing. 
D) Disability and survivor's benefits are typically the same amount as retirement benefits.

Question 10

Bill and Leslie are a married couple.Leslie is an account executive earning $75,000,and Bill is currently working on an advanced degree as well as taking care of their two-year-old son.Bill and Leslie want to make the maximum legal contribution to their IRA accounts.An appropriate contribution might be ____ in Bill's IRA and ____ in Leslie's IRA.

Accepted Answer

A) $5,500; $5,500 
B) $11,000; $0 
C) $5,000; $5,000 
D) $250; $5,500

Question 11

For Social Security purposes,workers younger than age 72 who have fewer than six credits of work experience are transitionally insured.

Accepted Answer

A) True 
 B)False

Question 12

Upon termination of employment,an employee can keep his or her savings in a tax-sheltered account by transferring the retirement funds from the employer's account to another account without penalty in a protection called

Accepted Answer

A) severance. 
B) vesting. 
C) portability. 
D) sheltering.

Question 13

Electing to receive Social Security retirement benefits prior to age 67 can result in reduced benefits if your earmed income from other sources exceeds $15,120.

Accepted Answer

A) True 
 B)False

Question 14

The process by which a decedent's estate is settled and the assets distributed by the courts to legal heirs is called

Accepted Answer

A) intestate. 
B) community property distribution. 
C) probate. 
D) estate planning.

Question 15

Maria and James (ages 26 and 30) withdrew $10,000 from their IRA accounts to pay for a new car when their old car was destroyed in a fire.None of the contributions to their accounts had been taxed before going into the IRAs.Which of the following statements is (are) true?

Accepted Answer

A) They will pay a $1,000 penalty. 
B) They will pay taxes on the $10,000 withdrawal. 
C) They will pay taxes on only the portion of the $10,000 that represents investment earnings. 
D) They will pay a $1,000 penalty, and they will pay taxes on the $10,000 withdrawal.

Question 16

In which of the following is the retirement plan contribution for the employee dependent on the financial success of the employer?

Accepted Answer

A) Profit-sharing 
B) Employee stock-ownership 
C) Nonqualified deferred-compensation 
D) Salary reduction

Question 17

One's take-home pay is reduced during the working years with a(n) ____ retirement plan.

Accepted Answer

A) contributory 
B) salary-reduction 
C) vested 
D) integrated

Question 18

The process by which employees obtain nonforfeitable rights to their retirement benefits that cannot be taken away in case of dismissal or resignation is called

Accepted Answer

A) funding. 
B) vesting. 
C) integration. 
D) catch-up.

Question 19

A husband and wife could make up to how much in gifts to their two children each year without having tax consequences.

Accepted Answer

A) $14,000 
B) $28,000 
C) $42,000 
D) $56,000

Question 20

The trustor gives up the following right(s) under an irrevocable living trust:

Accepted Answer

A) Control of the property 
B) Change of the beneficiaries 
C) Change of the trustees 
D) All of these.

Exam 17: Retirement and Estate Planning

Important factors in determining the amount received from a defined-benefit pension plan are number of years worked in the firm and average income.

Lina earns $135,000 a year,while Christine earns $125,000 a year.If both are employees and the Social Security wage base is $117,000,Lina pays ____ Social Security taxes than (as) Christine.

The IRS requires that withdrawals from traditional IRAs begin no later than age 65.

Only the wealthy have an estate.

The goal of Monte Carlo Analysis is to find an optimal portfolio of assets that will have the highest expected returns for that level of risk.

Liz,a university student,earned $4,500 working as a waitress during the summer and over semester break last year.How many Social Security credits did Liz earn for Social Security coverage?

An unmarried domestic partner usually has no legal claim on the probate estate of their deceased partner who died without naming them in the will.

You can name a contingent beneficiary on an asset in case the beneficiary dies before you do.

Which of the following statements about survivor's and disability benefits under defined-benefit plans is false?

For Social Security purposes,workers younger than age 72 who have fewer than six credits of work experience are transitionally insured.

Upon termination of employment,an employee can keep his or her savings in a tax-sheltered account by transferring the retirement funds from the employer's account to another account without penalty in a protection called

Electing to receive Social Security retirement benefits prior to age 67 can result in reduced benefits if your earmed income from other sources exceeds $15,120.

The process by which a decedent's estate is settled and the assets distributed by the courts to legal heirs is called

Maria and James (ages 26 and 30) withdrew $10,000 from their IRA accounts to pay for a new car when their old car was destroyed in a fire.None of the contributions to their accounts had been taxed before going into the IRAs.Which of the following statements is (are) true?

In which of the following is the retirement plan contribution for the employee dependent on the financial success of the employer?

One's take-home pay is reduced during the working years with a(n) ____ retirement plan.

The process by which employees obtain nonforfeitable rights to their retirement benefits that cannot be taken away in case of dismissal or resignation is called

A husband and wife could make up to how much in gifts to their two children each year without having tax consequences.

The trustor gives up the following right(s) under an irrevocable living trust: