AGLS Exam 3- FLASHCARDS - Investments part 2

Question 1

Are pensions becoming more rare?

Answer 1

Yes

Question 2

What do you need to recieve social security?

Answer 2

Earned income

Question 3

What was the max contribution made to an IRA in 2021?

Answer 3

$6,000

Question 4

What was the maximum 401k contribution for 2021?

Answer 4

$19,500

Question 5

What is the formula for annual retirement payment?

Answer 5

Years of service x 2.3% x average of 5 highest years of salary

Question 6

How many credits must you have to be eligible for retirement, dissability, and survivor benefits?

Answer 6

40 credits

Question 7

What is the earliest age for recieving social security benefits?

Answer 7

62

Question 8

What is the earliest age for receiving full Social Security benefits?

Answer 8

67

Question 9

What is the age that Social Security retirement benefits stop growing due to postponing retirement?

Answer 9

70

Question 10

With what do you pay taxes now (year of contribution)?

Answer 10

Roth IRA and roth 401k

Question 11

With what do you pay taxes later (year of withdrawl)?

Answer 11

Traditional IRA and traditional 401k

Question 12

With what account is employer matching?

Answer 12

Traditional 401k and roth 401k

Question 13

With what account are investments managed by the employer?

Answer 13

Traditional 401k and roth 401k

Question 14

With what account are investments managed by you?

Answer 14

Traditional IRA and roth IRA

Question 15

What is matching?

Answer 15

Contribution an employer makes to an employee’s retirement plan based upon original contributions the employee makes. Ask employers what their matching policy is

Question 16

What is the average matching contribution?

Answer 16

4.30%

Question 17

What is the most common match?

Answer 17

50 cents on the dollar up to 6% of the employee’s pay

Question 18

What do vesting schedules differ based on?

Answer 18

Each employer

Question 19

What is the earliest age capable of withdrawing from tax advantaged retirement plans without 10% penalty?

Answer 19

59.5

Question 20

What is the age at which Required Minimum Distributions will be made from a tax advantaged retirement plan?

Answer 20

72

Question 21

What is a custodian?

Answer 21

Organization that holds the assets of the defined contribution plan

Question 22

What are 401k/403b plans from former employees transferred to?

Answer 22

New employer’s 401k plan or your own IRA

Question 23

What do you want to be careful when changing tax designations from?

Answer 23

Traditional to roth

Question 24

What are the characteristics of taxable investment accounts?

Answer 24

No taxable advantages, many cost effective options, and low minimum investments

Question 25

What account gives you more liquidity than a retirement account?

Answer 25

Taxable investment account

Question 26

What is an option if your employer has no retirement program or bad investment options?

Answer 26

Taxable investment account

Question 27

What is a 529 plan?

Answer 27

Tax advantaged savings plan sponsored by states and educational institutions within section 529 of federal tax code

Question 28

What are the 529 plan options?

Answer 28

Prepaid tuition plans and education savings plans

Question 29

What is a health savings account?

Answer 29

Tax advantaged account to save for medical expenses

Question 30

What is the only tax advantaged account that is exempt from both income taxes and FICA (social security and medicine)?

Answer 30

Health savings account

Question 31

What health plan must you be enrolled in to have a health savings account?

Answer 31

High deductible health plan

Question 32

What is the 2020 HSA limit (including employer and employee contributions) for a health savings account?

Answer 32

$3,600

Question 33

What happens to contribtions left over each year?

Answer 33

They are invested, allowing you to gain compound interest and pay for qualified medical expenses at any time