Retirement & Investment Accounts

Question 1

What is a Brokerage Account?

Answer 1

A regular investment account, a non-retirement account, a place where you can buy, sell, and trade investments

Question 2

Why do we use Retirement accounts?

Answer 2

For tax benefits / incentives

Question 3

What does IRA stand for? And what are the 2 types?

Answer 3

Individual Retirement Arrangement. Traditional (tax-deferred) and Roth (pay income taxes now)

Question 4

Who opens the following accounts, you or your employer?
Roth IRA
Traditional IRA
SEP IRA
Solo 401k

Answer 4

You (or you if you’re the employer)

Question 5

Who opens the following accounts, you or your employer?
401k
Roth 401k
403b
457b
TSP
Simple IRA

Answer 5

Employer

Question 6

My Roth IRA/401k/etc. is a ____ ______ that holds ______.

Answer 6

bank account; investments

Question 7

True or false: Nobody knows if deferred taxes are better or worse than paying taxes now.

Answer 7

True

Question 8

What is a vesting schedule?

Answer 8

When match money (from like a 401k) legally becomes yours after X years

Question 9

You can only contribute $6,000 to a Roth IRA if you ________ $6,000 in ______ _______.

Answer 9

earned $6k in reported income that year

Question 10

Roth IRA: you can withdraw your _____ at any time without penalty/taxes

Answer 10

Contributions

Question 11

What is a Backdoor Roth IRA?

Answer 11

When you contribute to a Traditional IRA and immediately move it into a Roth IRA at the same bank. (You should work with a tax advisor to do this.)

Question 12

What are the 2 general types of limitations on tax-deferred accounts?

Answer 12

1. Contribution limits / less flexibility
2. Penalty for withdrawing too early (before age 59.5)

Question 13

If you have multiple IRAs, the contribution ____ applies to the total contribution across accounts.

Answer 13

limit

Question 14

Health Savings Accounts have to be paired with a ______-_______ health insurance plan

Answer 14

high-deductible

Question 15

Benefits of a HSA (2)

Answer 15

1. No taxes (neither deposited nor withdrawal nor investment gains on qualified medical expenses)
2. You can invest the money in an HSA

Question 16

What is the “4%” guideline for retirement $ collection?

Answer 16

That in retirement, you take an average of 4% off of your portfolio each year (selling stocks/bonds) for 25 years.

(This may not be exactly what you should do, but that’s the idea.)