Chapter 1

Question 1

T/F Generally Employees want to have retirement benefits pre-tax rather than after tax dollars

Answer 1

True.

Question 2

T/F Employees generally do not know the total cost of retirement and how to achieve financial security.

Answer 2

True

Question 3

T/F Employees have great confidence they will have a great retirement

Answer 3

False, most do not. Myth: 27 say they plan to work in retirement. Only 23% of retirees actually work. Myth 25 want to retire before the age of 65 and 26 want to retire at age 70 or later. Fact: The average worker retires at age 62. 50 percent of retirees retired early before age 65 for some reason that was beyond their own control. Employees typically spend more time planning their vacations rather than planning their retirement.

Question 4

Benefits cost add an additional ____ to ____ to payroll expeneses

Answer 4

40 to 50 percent

Question 5

Employers view retirement plans and employee benefits as part of overall _____ ______ .

Answer 5

Compensation costs.

Question 6

T/F Employee benefit plans help business recruit, hire, and retain qualified workers.

Answer 6

True

Question 7

There is approximately ____ trillion in tax-deferred accounts in 2013.

Answer 7

21.9

Question 8

List a few interested professionals

Answer 8

Actuaries, pension consultants, valuation experts, financial planners, employee benefit consultants, ERISA Attorneys, CPAs, Plan Administrators.

Question 9

List a few interested institutions

Answer 9

Banks, mutual funds, insurance companies, wirehouses, brokerage firms.

Question 10

Tax legislation is sometimes used to promote ____ change.

Answer 10

Social

Question 11

What are some ways the government uses taxes to promote social change?

Answer 11

Sin tax on cigarettes, alcohol, and other goods. Tax benefits through charitable contributions and other deductions. Education incentives.

Question 12

How does the government promote social change within the context of retirement?

Answer 12

While the government does provide Social Security and Medicare systems designed to act as safety nets for individuals, the government also provides tax incentives to encourage individuals to have other sources of retirement income and therefore less burden on the social security system. Therefore, the government has a vested interest in tax deferred accounts.

Question 13

To provide clients with appropriate retirement planning, the financial planner must have a thorough knowledge of:

Answer 13

Retirement funding and forcasting, qualified plans, tax-advantaged plans, nonqualified plans, medicare, social security, and employer-provided fringe benefits.