Question 1

A positive aspect of defined-benefit plans is that

Accepted Answer

A)  they are more transferable than defined-contribution plans.
B)  they generally permit earlier vesting than defined-contribution plans.
C)  the funds are out of reach of corporate creditors.
D)  the plans include disability and survivor's benefits.

Question 2

The best-known defined-contribution plan is the

Accepted Answer

A)  401(k)  plan.
B)  403(b)  plan.
C)  457 plan.
D)  SIMPLE IRA.

Question 3

If the Social Security (FICA plus Medicare)  tax rate is 7.65 percent,how much total Social Security tax would be paid by an employee earning $50,000 and his or her employer?

Accepted Answer

A)  $3,825
B)  $4,797
C)  $7,650
D)  $15,300

Question 4

Cliff vesting can result in 100 percent vesting after 3 years of employment.

Accepted Answer

A) True 
 B)False

Question 5

Retirement is the time in life when the major sources of income change from earned income to employer-based retirement benefits,private savings and investments,income from Social Security,and perhaps part-time employment.

Accepted Answer

A) True 
 B)False

Question 6

If the spouse waives his or her survivor's benefits in a defined-benefit retirement plan,the worker's retirement benefit will increase.

Accepted Answer

A) True 
 B)False

Question 7

Retirement plans available to the self-employed include

Accepted Answer

A)  IRAs.
B)  SEP-IRAs.
C)  Keogh plans.
D)  All of these.

Question 8

A married worker who is to receive income from his or her defined-benefit plan can elect to have a higher check that will stop upon his or her death but only if

Accepted Answer

A)  the employer allows such a situation.
B)  he or she contributed an extra amount into the plan while employed.
C)  his or her spouse consents.
D)  the spouse works for the same firm.

Question 9

Which of the following statements regarding Keogh accounts is true?

Accepted Answer

A)  The annual limitation on contributions to Keogh accounts is lower than the annual limitation on IRAs.
B)  One must have net self-employment income to contribute to a Keogh account.
C)  Earnings on Keogh investments are taxed deferred, but contributions are not tax-deductible.
D)  One can contribute to either an IRA or a Keogh, but not both in the same year.

Question 10

To be fully insured for Social Security retirement benefits,a worker must have ____ Social Security credits.

Accepted Answer

A)  6
B)  10
C)  40
D)  50

Question 11

Pensions are paid to retirees by organizations such as the Social Security Administration.

Accepted Answer

A) True 
 B)False

Question 12

The ______ phase is the years during which you need to save for retirement.

Accepted Answer

A)  accumulation
B)  distribution
C)  early
D)  later

Question 13

Parents can use their wills to name the guardian for their minor children.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following purposes is never allowed as an early withdrawal from a traditional individual retirement account (IRA) ?

Accepted Answer

A)  purchase of a home
B)  medical expenses
C)  education expenses
D)  purchase of a vehicle

Question 15

Cash-balance pension plans are managed like a defined-benefit plan with employers funding a program to provide retirement benefits based on a years-of-service formula.

Accepted Answer

A) True 
 B)False

Question 16

If you wait 7-9 years after starting your first full-time to begin saving for retirement,your nest egg at age 67 will likely be about one-half what it would have been if you had started right away.

Accepted Answer

A) True 
 B)False

Question 17

IRA funds can be invested in only very low-risk investments.

Accepted Answer

A) True 
 B)False

Question 18

A beneficiary is a person or organization designated to receive a benefit,such as an IRA or 401(k) plan.

Accepted Answer

A) True 
 B)False

Question 19

A diversified portfolio that automatically shifts the asset mix away from equities and toward more conservative fixed-income investments as you approach the year of your retirement is called a(n)  ____ fund.

Accepted Answer

A)  index
B)  target-date retirement
C)  exchange-traded
D)  money-market

Question 20

If you die intestate,your state of residence will decide how your assets are divided.

Accepted Answer

A) True 
 B)False

Exam 17: Retirement and Estate Planning

A diversified portfolio that automatically shifts the asset mix away from equities and toward more conservative fixed-income investments as you approach the year of your retirement is called a(n) ____ fund.

Correct AnswerverifiedShow Answer

The ______ phase is the years during which you need to save for retirement.

Correct AnswerverifiedShow Answer

IRA funds can be invested in only very low-risk investments.

Correct AnswerverifiedShow Answer

If you die intestate,your state of residence will decide how your assets are divided.

Correct AnswerverifiedShow Answer

A beneficiary is a person or organization designated to receive a benefit,such as an IRA or 401(k) plan.

Correct AnswerverifiedShow Answer

The best-known defined-contribution plan is the

Correct AnswerverifiedShow Answer

Retirement plans available to the self-employed include

Correct AnswerverifiedShow Answer

Cliff vesting can result in 100 percent vesting after 3 years of employment.

Correct AnswerverifiedShow Answer

A married worker who is to receive income from his or her defined-benefit plan can elect to have a higher check that will stop upon his or her death but only if

Correct AnswerverifiedShow Answer

Cash-balance pension plans are managed like a defined-benefit plan with employers funding a program to provide retirement benefits based on a years-of-service formula.

Correct AnswerverifiedShow Answer

To be fully insured for Social Security retirement benefits,a worker must have ____ Social Security credits.

Correct AnswerverifiedShow Answer

Parents can use their wills to name the guardian for their minor children.

Correct AnswerverifiedShow Answer

If you wait 7-9 years after starting your first full-time to begin saving for retirement,your nest egg at age 67 will likely be about one-half what it would have been if you had started right away.

Correct AnswerverifiedShow Answer

Retirement is the time in life when the major sources of income change from earned income to employer-based retirement benefits,private savings and investments,income from Social Security,and perhaps part-time employment.

Correct AnswerverifiedShow Answer

If the spouse waives his or her survivor's benefits in a defined-benefit retirement plan,the worker's retirement benefit will increase.

Correct AnswerverifiedShow Answer

Pensions are paid to retirees by organizations such as the Social Security Administration.

Correct AnswerverifiedShow Answer

If the Social Security (FICA plus Medicare) tax rate is 7.65 percent,how much total Social Security tax would be paid by an employee earning $50,000 and his or her employer?

Correct AnswerverifiedShow Answer

A positive aspect of defined-benefit plans is that

Correct AnswerverifiedShow Answer

Which of the following purposes is never allowed as an early withdrawal from a traditional individual retirement account (IRA) ?

Correct AnswerverifiedShow Answer

Which of the following statements regarding Keogh accounts is true?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified