Module 7 Quiz Flashcards
Employee elective deferrals to a 401(k) may be subject to which of the following vesting schedules?
Immediate vesting
Which of the following retirement plan distributions is subject to 20% withholding?
A lump sum distribution from a 401(k) plan
Which of these would an individual receive at full retirement age (FRA)?
PIA
What is the potential maximum contribution that a 51-year-old individual could make to an IRA account in 2022?
$7,000
Which of these statements regarding SEP-IRAs is NOT correct?
It is an IRA established by an employee
Which of the following is a primary source of retirement income?
I. Medicare
II. Social Security
III. Savings and investments
IV. Employer-provided retirement plans
II. Social Security
III. Savings and investments
IV. Employer-provided retirement plans
What would Julian’s annual retirement benefit be if his highest years of compensation was $77,000 on average, he had been working for the company for 33 years, and he received 2% of compensation for each year of service as his retirement benefit?
$50,820
Automation Associates provides a 50% match on employee contributions that are up to 5% of employee compensation in the company’s 401(k) plan. George earns $40,000 per year and has contributed $2,500 to the 401(k) plan this year. How much will George’s match be?
$1,000
Which of these statements regarding IRAs is CORRECT?
Individuals may make nondeductible IRA contributions
Which of these statements about profit-sharing plans is CORRECT?
An employer is expected to make contributions to a profit-sharing plan on a recurring and substantial basis
Which of these retirement plans has the lowest limit on employee elective contributions in 2022?
SIMPLE IRA
What is the required minimum distribution for Alexandra if her account balance at the end of the previous year was $336,000 and her life expectancy is 24.7 years, based on her being age 73 at the end of the current year?
$13,603
$336,000 / 24.7
What is the limit on contributions to a traditional IRA for a single person who earns $1,500 per year?
$1,500
What is the deadline for making contributions to a traditional IRA in the current year?
April 15 of the following year
Which of these is an important reason to begin saving early for retirement?
To maximize compound growth over time
Which of these combined demographic groups comprise the largest percentage of the U.S. population?
Baby boomers and millennials
Which of the following statements regarding retirement benefits or retirement trends is CORRECT?
I. There is an increasing trend toward employee contributory plans.
II. Social Security is a funded system with savings accounts for worker contributions.
I. There is an increasing trend toward employee contributory plans
Roland, age 60, has made deposits totaling $18,000 into a Roth IRA account. The account is now worth $24,500. He withdraws $10,500 to purchase a car. How much of this withdrawal is taxable?
$0
Funds used for which of the following is an exception from the 10% early withdrawal penalty that applies to all retirement plans?
Total and permanent disability of the account owner
Assume that a worker’s Social Security full retirement age is 67, and the worker retires and starts drawing Social Security early at age 64. What are the consequences?
The worker receives a reduced benefit for the rest of his life
To be eligible for Social Security retirement benefits, an individual must be _____.
Fully insured
Which of these statements regarding age 72 minimum distribution requirements is CORRECT?
A deductible IRA owner must pay a 50% penalty tax on any required minimum distributions (RMDs) not taken
If an IRA owner’s required minimum distribution (RMD) for the year is $20,000, but only $6,000 was withdrawn, what is the penalty for failure to take the full RMD?
$7,000
50% of the missing remainder of the RMD
When is an individual most vulnerable to a large loss?
At the beginning of retirement
At what age does an individual become entitled to Medicare benefits?
65
Mitzi is considering working while receiving Social Security benefits. Which of these statements correctly describes the consequences of Mitzi working while receiving Social Security benefits?
If taking Social Security benefits at age 62, any income earned that year will reduce the benefit $1 for every $2 over a set monthly limit until the year of full retirement age (FRA)
The risk that one might outlive her assets is called _____.
Longevity risk
Each of the following is a pitfall to having enough assets for a comfortable retirement except _____.
Inheritances
Which of the following statements regarding retirement plans is CORRECT?
With two-to-six year graded vesting, a plan participant would be 60% vested after four years
Which of these statements regarding Social Security retirement benefits is CORRECT?
If a worker delays receiving benefits until after full retirement age (FRA), the benefit amount will increase by 8% of PIA for each year of postponement
