Question 1

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-A Roth IRA will be funded with [pre | post] tax dollars.

Accepted Answer

A Roth IRA is funded with post-tax dollars, meaning the money you deposit into the account has already been taxed. When you withdraw the money in retirement, you won't owe any taxes on the earnings or the withdrawals.

Question 2

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-There is a [5% | 10%] federal income tax penalty for pension plan withdrawals before age 59.

Accepted Answer

The correct choice is "10%" because there is a 10% federal income tax penalty for early withdrawals from a pension plan before age 59½.

Question 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-[Social Security | 401k] is the single largest source of income for the average U.S.retiree.

Accepted Answer

Social Security is the single largest source of income for the average U.S. retiree, not a 401k.

Question 4

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-If you need to withdraw your money from an annuity very soon after you begin making contributions,there most likely will be a [small | large] surrender fee.

Accepted Answer

Annuities typically have a large surrender fee if you withdraw your money soon after beginning contributions, as they are designed for long-term investment.

Question 5

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The costs of investing in a variable annuity is typically [higher | lower] than investing in mutual funds.

Accepted Answer

Variable annuities typically have higher expenses (such as administration fees, mortality and expense risk charges, and investment management fees) than mutual funds, which can make them a more expensive investment option.

Question 6

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-[Earned income | 401k's] has accounted for a growing amount of total retirement income.

Accepted Answer

The statement is referring to the sources of retirement income and how they have changed over time. "Earned income" refers to income that is earned through employment, while "401k's" refers specifically to a type of retirement savings account. While 401k's may be a significant source of retirement income for some individuals, earned income is likely to be a more significant source overall. Therefore, "earned income" is the better choice to complete the statement.

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-You can withdraw [your contribution | the total balance] of your Roth IRA at any time without penalty.

Accepted Answer

According to Roth IRA rules, you can withdraw your contributions (the money you put into the account) at any time without penalty. However, if you withdraw any earnings made on those contributions before the age of 59 ½ or before the account has been open for at least 5 years, you may face penalties and taxes. Therefore, the phrase "the total balance" is not a correct completion of the statement.

Question 8

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-You are age 45 and healthy,and you are withdrawing money from your IRA.There [will | will not] be a tax penalty for doing this.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 9

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-With a life annuity,period certain,a payment will be made for a stated period of time [only to the annuitant if she lives | to someone else if the annuitant dies].

Accepted Answer

With a life annuity, period certain, a payment will be made for a stated period of time to someone else if the annuitant dies. This means that if the annuitant dies during the stated period of time, the payments will continue to be made to a designated beneficiary or heir.

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The period during which annuity payments are made to the individual is called the [distribution | survivorship] period.

Accepted Answer

The period during which annuity payments are made to the individual is called the distribution period. Survivorship period refers to the period of time after the death of the annuity holder during which payments may continue to a beneficiary.

Question 11

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-A straight life annuity payment option will result in the [highest | lowest] possible monthly payments to the annuitant.

Accepted Answer

A straight life annuity payment option will result in the highest possible monthly payments to the annuitant because it provides payments only for the life of the annuitant and does not include any beneficiary or survivor benefits. This means that the insurer can pay out higher monthly payments since it is only a single life policy.

Question 12

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The Pension Benefit Guarantee Corporation (PBGC)protects employees pensions from [inflation | bankruptcy].

Accepted Answer

The PBGC protects employees' pensions in the event that their employer declares bankruptcy and is unable to fulfill their pension obligations. Inflation is not directly related to the PBGC's role in protecting pensions.

Question 13

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Government research indicates that about [30 | 60] percent of households approaching retirement age have 401(k)accounts.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-It usually makes less sense to convert a traditional IRA to a Roth IRA the [younger |older] you are.

Accepted Answer

It usually makes less sense to convert a traditional IRA to a Roth IRA the older you are because you have less time to benefit from the tax-free growth and withdrawals that a Roth IRA offers.

Question 15

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-[SEP | Keogh] plans are easier to establish.

Accepted Answer

SEP plans are easier to establish than Keogh plans.

Question 16

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-[Any gainfully employed person | Only certain employees] can put money into an IRA.

Accepted Answer

Any gainfully employed person can put money into an IRA. There are no restrictions on who can contribute to an IRA based on job type or certain employee status. Therefore, option A is the correct choice.

Question 17

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The [Roth | traditional] IRA is typically recommended for people in their 30s or 40s.

Accepted Answer

A Roth IRA is typically recommended for younger individuals, such as those in their 30s or 40s, because they are likely in a lower tax bracket now compared to when they retire, allowing them to benefit from tax-free withdrawals in retirement.

Question 18

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-With a [fixed rate | variable] annuity,you would receive a guaranteed payment regardless of the investment activity of the investment funds.

Accepted Answer

A fixed rate annuity provides guaranteed payments regardless of the investment performance, unlike a variable annuity where payments can fluctuate based on investment returns.

Question 19

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The median household approaching retirement has less than [25 | 50] percent of the money needed to maintain their standard of living in retirement.

Accepted Answer

The statement indicates that the median household approaching retirement has saved less than 50% of the money needed to maintain their standard of living in retirement. Since one option is less than 50%, the correct choice is A.

Question 20

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-In general,the tax law changes made in 2001 [increased | decreased] the tax advantages for retirement accounts.

Accepted Answer

"increased" is the correct choice as it is mentioned that tax advantages for retirement accounts were affected by the tax law changes made in 2001.

Quiz 14: Planning for Retirement

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -A Roth IRA will be funded with [pre | post] tax dollars.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -There is a [5% | 10%] federal income tax penalty for pension plan withdrawals before age 59.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -[Social Security | 401k] is the single largest source of income for the average U.S.retiree.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -If you need to withdraw your money from an annuity very soon after you begin making contributions,there most likely will be a [small | large] surrender fee.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The costs of investing in a variable annuity is typically [higher | lower] than investing in mutual funds.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -[Earned income | 401k's] has accounted for a growing amount of total retirement income.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -You can withdraw [your contribution | the total balance] of your Roth IRA at any time without penalty.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -You are age 45 and healthy,and you are withdrawing money from your IRA.There [will | will not] be a tax penalty for doing this.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -With a life annuity,period certain,a payment will be made for a stated period of time [only to the annuitant if she lives | to someone else if the annuitant dies].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The period during which annuity payments are made to the individual is called the [distribution | survivorship] period.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -A straight life annuity payment option will result in the [highest | lowest] possible monthly payments to the annuitant.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The Pension Benefit Guarantee Corporation (PBGC) protects employees pensions from [inflation | bankruptcy].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Government research indicates that about [30 | 60] percent of households approaching retirement age have 401(k) accounts.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -It usually makes less sense to convert a traditional IRA to a Roth IRA the [younger |older] you are.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -[SEP | Keogh] plans are easier to establish.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -[Any gainfully employed person | Only certain employees] can put money into an IRA.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The [Roth | traditional] IRA is typically recommended for people in their 30s or 40s.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -With a [fixed rate | variable] annuity,you would receive a guaranteed payment regardless of the investment activity of the investment funds.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The median household approaching retirement has less than [25 | 50] percent of the money needed to maintain their standard of living in retirement.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -In general,the tax law changes made in 2001 [increased | decreased] the tax advantages for retirement accounts.