Question 1

Frances McClurg favors the Roth IRA over the traditional IRA.What advantage does the Roth provide over the traditional IRA?

Accepted Answer

The advantage of the Roth IRA over the traditional IRA is that the contributions are made with after-tax dollars, but the withdrawals are tax-free. This means that Frances can avoid income taxes when she withdraws from her Roth IRA, making it a better choice for her.

Question 2

What does the term 'self directed' mean concerning retirement accounts?

Accepted Answer

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Question 3

Under a single life annuity,you receive a set monthly payment for the rest of your life.

Accepted Answer

Under a single life annuity, the annuitant receives a fixed monthly payment for the rest of their life.

Question 4

According to a Money magazine poll,what percent of Millennials say they are in agreement with their partners on saving for retirement?

Accepted Answer

According to the Money magazine poll, 79% of Millennials say they are in agreement with their partners on saving for retirement. This means that the majority of Millennials are on the same page as their partners when it comes to planning for their financial future. However, it's important to note that there is still a significant portion of Millennials (21%) who may not be in agreement with their partners about retirement savings.

Question 5

Alicia works two jobs and still makes very little income.Why is the Saver's Tax Credit a good idea for her?

Accepted Answer

The Saver's Tax Credit can benefit Alicia in multiple ways. It can possibly increase her tax refund and reduce the amount of income tax that she owes. Additionally, it allows her to offset part of the first $2,000 that she can contribute to an IRA or a 401(k) plan. Therefore, all of the above options are correct.

Question 6

How does one set up a qualified individual retirement account?

Accepted Answer

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Question 7

What is the purpose of a rollover when it comes to retirement plans?

Accepted Answer

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Question 8

What are the advantages and disadvantages of a defined-contribution plan like a 401k?

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Question 9

Are retirement plans different for the self-employed and employees of small businesses? Do you have to work full-time to qualify for one?

Accepted Answer

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Question 10

What are the major differences between the new IRAs and the traditional IRA?

Accepted Answer

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Question 11

Lori Watts favors the traditional IRA over the Roth IRA.What advantage does the traditional IRA have over the Roth?

Accepted Answer

The traditional IRA offers the advantage of likely being fully or partially tax deductible, which can result in immediate tax savings. However, the earnings in a traditional IRA are taxable upon withdrawal, unlike a Roth IRA where earnings are tax-exempt. Ultimately, the best choice depends on an individual's specific financial situation and retirement goals.

Question 12

If you have a defined-benefit retirement plan through your place of employment,you are considered a(n)________;and as such,there is an income limit after which your IRA contributions are no longer tax deductible.

Accepted Answer

If you have a defined-benefit retirement plan through your place of employment, you are considered an active participant, and as such, there is an income limit after which your IRA contributions are no longer tax deductible. Option A is incorrect as there is no such term as a "restricted participant," and option B is incorrect as there is no such term as a "deactivated participant." Option D is incorrect as both options A and B are incorrect.

Question 13

Depending on the state ,a 529 plan allows an individual to invest how much money tax free for college expenses?

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Question 14

Compare and contrast the defined-contribution plans.

Accepted Answer

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Question 15

Fred and Carlie want to save some money for a down payment on a house.They figure it will take at least 10 years to save up enough money.Which of the following would be the best way for them to save this money?

Accepted Answer

A Roth IRA would be the best choice for Fred and Carlie as they plan to save for at least 10 years. Roth IRA offers tax-free growth and withdrawals, and there are no minimum distributions required at a certain age, making it a flexible savings option for long-term goals like buying a house. The other options, such as traditional IRA, Keogh Plan, and 529 Savings Plan, have restrictions on withdrawals or contributions, which may not be suitable for their goal of saving for a down payment on a house.

Question 16

Which of the following statements about saving for college is not true?

Accepted Answer

You do not have to open a 529 plan sponsored by the state in which you reside. You can choose any state's 529 plan that best fits your needs.

Question 17

Jose does not have a retirement plan at work.He currently earns $30,000 in salary and is in the 15% marginal tax bracket.If he contributes the maximum contribution of $5,500 to his traditional IRA,how much money will he save on his income tax liability?

Accepted Answer

Contributions to a traditional IRA provide tax deductions, which reduces one's taxable income. In this case, Jose is in the 15% marginal tax bracket, which means that for every dollar he contributes to his traditional IRA, his income tax liability will be reduced by $0.15. If he contributes the maximum of $5,500, then his tax liability will be reduced by $5,500 x 0.15 = $825. Option A is incorrect because a traditional IRA also provides tax deductions on contributions. Option B is incorrect because individuals with incomes up to $63,000 (for single filers) and $101,000 (for married couples filing jointly) can generally deduct their contributions to a traditional IRA, which applies to Jose's income level. Option D is incorrect because the maximum contribution limit is $5,500, so he cannot contribute more than that amount.

Question 18

June and Ward Cleaver are married.June works as an accountant and contributes to a 401(k)plan at work.Ward is a web page designer and works for himself from their home.What type of retirement plan would be an option for Ward?

Accepted Answer

All of the options listed are suitable retirement plans for self-employed individuals like Ward. A Keogh plan is designed for self-employed individuals and offers higher contribution limits. A SEP-IRA allows self-employed individuals to contribute a portion of their earnings to their retirement. An Individual IRA is available to anyone with earned income, including self-employed individuals.

Question 19

Roth IRA's contributions are not tax deductible,however the distributions allow you to take money?

Accepted Answer

Roth IRA distributions allow you to take money tax-free, making it an attractive option for those who anticipate being in a higher tax bracket in the future or who want to have tax-free income in retirement.

Question 20

Why is it a wise idea to have 3 retirement plans in place?

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Quiz 15: Retirement Planning