Question 1

With respect to your federal income taxes,which one of the following may you have to do during retirement,even if you did not have to do so prior to retiring?

Accepted Answer

A)  Report your dividend and interest income
B)  Visit your local IRS office
C)  File semiannual tax returns in April and October
D)  File quarterly estimated tax returns or arrange for withholding on pension payments
E)  File semiannual reports listing all of your income sourcesF) B) and E)
G) B) and D)

Question 2

The current value of your life insurance and pensions are included in your assets.

Accepted Answer

A) True 
 B)False

Question 3

Up to what percent of your Social Security benefits may be subject to federal income tax?

Accepted Answer

A)  10
B)  25
C)  50
D)  75
E)  85F) C) and D)
G) A) and D)

Question 4

Which one of the following is a disadvantage associated with Social Security retirement income?

Accepted Answer

A)  Earned income may partially offset benefits
B)  Forced savings
C)  Portable from job to job
D)  Cost shared with employer
E)  Inflation-adjusted survivorship rightsF) A) and D)
G) D) and E)

Question 5

Jasmine Smith owes $175,000 on her condo and $15,000 on her car and has no other debts.Her net worth is $132,000.What are her total assets?

Accepted Answer

A)  $78,000
B)  $132,000
C)  $175,000
D)  $190,000
E)  $322,000F) None of the above
G) A) and E)

Question 6

Your work-related expenses,such as driving back and forth to work,will be lower or eliminated during retirement.

Accepted Answer

A) True 
 B)False

Question 7

You can create a "my Social Security" account if you are 18 or older and have a Social Security number,valid e-mail,and U.S.mail address.

Accepted Answer

A) True 
 B)False

Question 8

According to the 2017 Trustees Report,in what year is it projected that the funds available for paying Social Security benefits will be exhausted at current benefit and tax rates?

Accepted Answer

A)  2021
B)  2033
C)  2047
D)  2050
E)  2062F) D) and E)
G) C) and D)

Question 9

Which of the following is typically a characteristic of a defined contribution plan?

Accepted Answer

A)  Employer promises a retirement benefit
B)  No employee contributions
C)  No federal guarantee of benefits
D)  Retirement benefit computed based on an age,wage,and years of service formula
E)  Account balance not transferable to an IRAF) A) and D)
G) A) and C)

Question 10

The contribution Billy Foster's employer makes to his retirement plan depends on the profits of the company.What type of retirement plan does Billy have?

Accepted Answer

A)  Money-purchase pension plan
B)  Stock bonus plan
C)  Profit-sharing plan
D)  Salary reduction plan
E)  403(b) planF) C) and E)
G) None of the above

Question 11

Sam Waterston has been making contributions into an individual retirement account to help pay for his children to go to college.Which type of account is he most likely using?

Accepted Answer

A)  Traditional IRA
B)  Roth IRA
C)  SEP-IRA
D)  Coverdell Education Savings Account
E)  Rollover IRAF) A) and D)
G) A) and C)

Question 12

Which one of the following is not a typical characteristic of a defined contribution plan?

Accepted Answer

A)  Employer may match contributions
B)  Ability to transfer account balance to an IRA
C)  Guaranteed formula-based benefit
D)  Employee-managed investments
E)  Benefit depends on employee contributionsF) B) and D)
G) None of the above

Question 13

You can depend on Social Security and your company pension to pay for your basic living expenses.

Accepted Answer

A) True 
 B)False

Question 14

The Education IRA was renamed the Coverdell Education Savings Account.

Accepted Answer

A) True 
 B)False

Question 15

As its retirement plan contribution,Aaron Copeland's employer has been buying shares of the company's stock for Aaron's benefit.What type of retirement plan does Aaron most likely have?

Accepted Answer

A)  Money-purchase pension plan
B)  Stock bonus plan
C)  Profit-sharing plan
D)  Salary reduction plan
E)  403(b) planF) A) and B)
G) C) and D)

Question 16

In a reverse annuity mortgage,a lender uses your house as collateral to buy an annuity for you from a life insurance company.

Accepted Answer

A) True 
 B)False

Question 17

The time to begin saving is when you are young.

Accepted Answer

A) True 
 B)False

Question 18

Whether or not you are covered by a pension plan,you can still make nondeductible IRA contributions.

Accepted Answer

A) True 
 B)False

Question 19

You can put your IRA funds in many kinds of investments,including stocks,bonds,mutual funds,real estate,and U.S.-minted gold and silver coins.

Accepted Answer

A) True 
 B)False

Question 20

ERISA established the Pension Benefit Guaranty Corporation to provide pension insurance.

Accepted Answer

A) True 
 B)False

Exam 18: Starting Early: Retirement Planning

Which of the following is typically a characteristic of a defined contribution plan?

Correct AnswerverifiedShow Answer

The time to begin saving is when you are young.

Correct AnswerverifiedShow Answer

You can put your IRA funds in many kinds of investments,including stocks,bonds,mutual funds,real estate,and U.S.-minted gold and silver coins.

Correct AnswerverifiedShow Answer

With respect to your federal income taxes,which one of the following may you have to do during retirement,even if you did not have to do so prior to retiring?

Correct AnswerverifiedShow Answer

Your work-related expenses,such as driving back and forth to work,will be lower or eliminated during retirement.

Correct AnswerverifiedShow Answer

Whether or not you are covered by a pension plan,you can still make nondeductible IRA contributions.

Correct AnswerverifiedShow Answer

You can depend on Social Security and your company pension to pay for your basic living expenses.

Correct AnswerverifiedShow Answer

Sam Waterston has been making contributions into an individual retirement account to help pay for his children to go to college.Which type of account is he most likely using?

Correct AnswerverifiedShow Answer

According to the 2017 Trustees Report,in what year is it projected that the funds available for paying Social Security benefits will be exhausted at current benefit and tax rates?

Correct AnswerverifiedShow Answer

The contribution Billy Foster's employer makes to his retirement plan depends on the profits of the company.What type of retirement plan does Billy have?

Correct AnswerverifiedShow Answer

Jasmine Smith owes $175,000 on her condo and $15,000 on her car and has no other debts.Her net worth is $132,000.What are her total assets?

Correct AnswerverifiedShow Answer

ERISA established the Pension Benefit Guaranty Corporation to provide pension insurance.

Correct AnswerverifiedShow Answer

Up to what percent of your Social Security benefits may be subject to federal income tax?

Correct AnswerverifiedShow Answer

Which one of the following is not a typical characteristic of a defined contribution plan?

Correct AnswerverifiedShow Answer

The Education IRA was renamed the Coverdell Education Savings Account.

Correct AnswerverifiedShow Answer

The current value of your life insurance and pensions are included in your assets.

Correct AnswerverifiedShow Answer

Which one of the following is a disadvantage associated with Social Security retirement income?

Correct AnswerverifiedShow Answer

You can create a "my Social Security" account if you are 18 or older and have a Social Security number,valid e-mail,and U.S.mail address.

Correct AnswerverifiedShow Answer

In a reverse annuity mortgage,a lender uses your house as collateral to buy an annuity for you from a life insurance company.

Correct AnswerverifiedShow Answer

As its retirement plan contribution,Aaron Copeland's employer has been buying shares of the company's stock for Aaron's benefit.What type of retirement plan does Aaron most likely have?

Correct AnswerverifiedShow Answer

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