Module 7 Quiz

Question 1

Employee elective deferrals to a 401(k) may be subject to which of the following vesting schedules?

Answer 1

Immediate vesting

Question 2

Which of the following retirement plan distributions is subject to 20% withholding?

Answer 2

A lump sum distribution from a 401(k) plan

Question 3

Which of these would an individual receive at full retirement age (FRA)?

Answer 3

PIA

Question 4

What is the potential maximum contribution that a 51-year-old individual could make to an IRA account in 2022?

Answer 4

$7,000

Question 5

Which of these statements regarding SEP-IRAs is NOT correct?

Answer 5

It is an IRA established by an employee

Question 6

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

Answer 6

II. Social Security
III. Savings and investments
IV. Employer-provided retirement plans

Question 7

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?

Answer 7

$50,820

Question 8

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?

Answer 8

$1,000

Question 9

Which of these statements regarding IRAs is CORRECT?

Answer 9

Individuals may make nondeductible IRA contributions

Question 10

Which of these statements about profit-sharing plans is CORRECT?

Answer 10

An employer is expected to make contributions to a profit-sharing plan on a recurring and substantial basis

Question 11

Which of these retirement plans has the lowest limit on employee elective contributions in 2022?

Answer 11

SIMPLE IRA

Question 12

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?

Answer 12

$13,603

$336,000 / 24.7

Question 13

What is the limit on contributions to a traditional IRA for a single person who earns $1,500 per year?

Answer 13

$1,500

Question 14

What is the deadline for making contributions to a traditional IRA in the current year?

Answer 14

April 15 of the following year

Question 15

Which of these is an important reason to begin saving early for retirement?

Answer 15

To maximize compound growth over time

Question 16

Which of these combined demographic groups comprise the largest percentage of the U.S. population?

Answer 16

Baby boomers and millennials

Question 17

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.

Answer 17

I. There is an increasing trend toward employee contributory plans

Question 18

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?

Answer 18

$0

Question 19

Funds used for which of the following is an exception from the 10% early withdrawal penalty that applies to all retirement plans?

Answer 19

Total and permanent disability of the account owner

Question 20

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?

Answer 20

The worker receives a reduced benefit for the rest of his life

Question 21

To be eligible for Social Security retirement benefits, an individual must be _____.

Answer 21

Fully insured

Question 22

Which of these statements regarding age 72 minimum distribution requirements is CORRECT?

Answer 22

A deductible IRA owner must pay a 50% penalty tax on any required minimum distributions (RMDs) not taken

Question 23

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?

Answer 23

$7,000

50% of the missing remainder of the RMD

Question 24

When is an individual most vulnerable to a large loss?

Answer 24

At the beginning of retirement

Question 25

At what age does an individual become entitled to Medicare benefits?

Answer 25

65

Question 26

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?

Answer 26

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)

Question 27

The risk that one might outlive her assets is called _____.

Answer 27

Longevity risk

Question 28

Each of the following is a pitfall to having enough assets for a comfortable retirement except _____.

Answer 28

Inheritances

Question 29

Which of the following statements regarding retirement plans is CORRECT?

Answer 29

With two-to-six year graded vesting, a plan participant would be 60% vested after four years

Question 30

Which of these statements regarding Social Security retirement benefits is CORRECT?

Answer 30

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