AGLS Exam 3- FLASHCARDS - Investments part 2
Are pensions becoming more rare?
Yes
What do you need to recieve social security?
Earned income
What was the max contribution made to an IRA in 2021?
$6,000
What was the maximum 401k contribution for 2021?
$19,500
What is the formula for annual retirement payment?
Years of service x 2.3% x average of 5 highest years of salary
How many credits must you have to be eligible for retirement, dissability, and survivor benefits?
40 credits
What is the earliest age for recieving social security benefits?
62
What is the earliest age for receiving full Social Security benefits?
67
What is the age that Social Security retirement benefits stop growing due to postponing retirement?
70
With what do you pay taxes now (year of contribution)?
Roth IRA and roth 401k
With what do you pay taxes later (year of withdrawl)?
Traditional IRA and traditional 401k
With what account is employer matching?
Traditional 401k and roth 401k
With what account are investments managed by the employer?
Traditional 401k and roth 401k
With what account are investments managed by you?
Traditional IRA and roth IRA
What is matching?
Contribution an employer makes to an employee’s retirement plan based upon original contributions the employee makes. Ask employers what their matching policy is
What is the average matching contribution?
4.30%
What is the most common match?
50 cents on the dollar up to 6% of the employee’s pay
What do vesting schedules differ based on?
Each employer
What is the earliest age capable of withdrawing from tax advantaged retirement plans without 10% penalty?
59.5
What is the age at which Required Minimum Distributions will be made from a tax advantaged retirement plan?
72
What is a custodian?
Organization that holds the assets of the defined contribution plan
What are 401k/403b plans from former employees transferred to?
New employer’s 401k plan or your own IRA
What do you want to be careful when changing tax designations from?
Traditional to roth
What are the characteristics of taxable investment accounts?
No taxable advantages, many cost effective options, and low minimum investments
What account gives you more liquidity than a retirement account?
Taxable investment account
What is an option if your employer has no retirement program or bad investment options?
Taxable investment account
What is a 529 plan?
Tax advantaged savings plan sponsored by states and educational institutions within section 529 of federal tax code
What are the 529 plan options?
Prepaid tuition plans and education savings plans
What is a health savings account?
Tax advantaged account to save for medical expenses
What is the only tax advantaged account that is exempt from both income taxes and FICA (social security and medicine)?
Health savings account
What health plan must you be enrolled in to have a health savings account?
High deductible health plan
What is the 2020 HSA limit (including employer and employee contributions) for a health savings account?
$3,600
What happens to contribtions left over each year?
They are invested, allowing you to gain compound interest and pay for qualified medical expenses at any time
