Deck 10: Planning for the Future: Retirement and Estate Planning

Question 1

Which of the following refers to a plan that defines how much your employer will deposit into your retirement account?

A) Pension plan.
B) Defined contribution plan.
C) Retirement plan.
D) Investment plan.

Answer 1

Defined contribution plan.

Question 2

How much is the median retirement account balance for the average U.S. household?

A) Less than $10,000.
B) Less than $50,000.
C) Less than $100,000.
D) Less than $250,000.

Answer 2

Less than $10,000.

Question 3

Which of the following has no promise of what the money will be worth when you retire?

A) Pension plan.
B) Defined contribution plan.
C) Retirement plan.
D) Investment plan.

Answer 3

Defined contribution plan.

Question 4

What is the typical wage replacement rate?

A) Between 30% and 40%.
B) Between 40% and 50%.
C) Between 60% and 70%.
D) Between 70% and 80%.

Question 5

Traditional IRAs allow you to claim a tax:

A) credit.
B) deduction.
C) exemption.
D) saving.

Question 6

Which of the following is an example of a defined contribution plan open to employees of the federal government?

A) 401(k).
B) 403(b).
C) 457(b).
D) Thrift savings plan.

Question 7

Which of the following is a defined contribution plan designed for public education and not-for-profit entities?

A) 401(k).
B) 403(b).
C) 457(b).
D) All of these answer choices are correct.

Question 8

Which of the following refers to the percent of your income that you are putting aside for retirement?

A) Wage replacement rate.
B) Retirement savings rate.
C) Savings rate.
D) Expense rate.

Question 9

Which of the following refers to living longer than expected?

A) Longevity risk.
B) Market risk.
C) Liquidity risk.
D) Business risk.

Question 10

How much of your IRA contribution may be deducted from your federal income tax return if you do not have access to an employer-provided retirement plan?

A) 50%.
B) 70%.
C) 90%.
D) 100%.

Question 11

Which of the following is an example of a defined contribution plan?

A) 401(k).
B) 403(b).
C) 457(b).
D) All of these answer choices are correct.

Question 12

Which of the following refers to a retirement account that is funded primarily by the employee?

A) Pension plan.
B) Defined contribution plan.
C) Retirement plan.
D) Investment plan.

Question 13

Where can you open a traditional IRA?

A) Bank or credit union.
B) Mutual fund company.
C) Brokerage firm.
D) All of these answer choices are correct.

Question 14

Which of the following is a requirement or limitation of a traditional IRA?

A) You must have earned income to contribute.
B) You can contribute only if you are under the age of 70½ years old.
C) Contribution limit of $5,500 for those under age 50 or $6,500 for those older than age 50 in 2018.
D) All of these answer choices are correct.

Question 15

Which of the following means that you will owe taxes only when you begin to take distributions from the account?

A) Tax-deferred.
B) Tax-exempt.
C) Risk.
D) Market risk.

Question 16

How much is the median savings for those nearing retirement age?

A) $10,000.
B) $12,000.
C) $50,000.
D) $150,000.

Question 17

Which of the following is a benefit of an individual retirement account (IRA)?

A) Tax benefits.
B) Asset protection from creditors.
C) Access to retirement savings in the event of certain emergencies.
D) All of these answer choices are correct.

Question 18

Which of the following is a defined contribution plan normally open to all employees working for a state or local government?

A) 401(k).
B) 403(b).
C) 457(b).
D) All of these answer choices are correct.

Question 19

Which of the following provides retirees with a guaranteed payment from their employer for the remainder of the retirees' life?

A) Pension plan.
B) Defined contribution plan.
C) Retirement plan.
D) Investment plan.

Question 20

Which of the following represents a consistent standard of living between pre- and postretirement?

A) Pension plan.
B) Defined contribution plan.
C) Retirement plan.
D) Wage replacement rate.

Question 21

Which of the following refers to proof of property ownership?

A) Title.
B) Fee simple.
C) Tenancy by the entirety.
D) Community property.

Question 22

Which of the following is an exception for withdrawing money early from your IRA without penalty?

A) Purchase of a new home.
B) Qualified education expenses.
C) Death or disability.
D) All of these answer choices are correct.

Question 23

Which of the following refers to a legal entity that holds property and assets for someone or some group?

A) Title.
B) Probate.
C) Trust.
D) Tenancy by the entirety.

Question 24

Which of the following refers to owning property with another person?

A) Tenancy in common.
B) Fee simple.
C) Tenancy by the entirety.
D) Community property.

Question 25

You will incur a penalty if you withdraw money from your IRA before what age, unless it meets an exception?

A) 45.
B) 50.
C) 55.
D) 59½.

Question 26

Which of the following refers to when your employer makes your retirement plan distribution directly to an IRA?

A) Trustee-to-trustee transfer.
B) Direct rollover.
C) 60-day rollover.
D) Rollover.

Question 27

Which of the following refers to the court-supervised process of distributing assets and paying debts after someone's death?

A) Title.
B) Probate.
C) Payable upon death.
D) Transfer on death.

Question 28

Which of the following refers to owning property with your spouse?

A) Title.
B) Fee simple.
C) Tenancy by the entirety.
D) Joint tenancy with right of survivorship.

Question 29

Which of the following refers to a form of earnings from investments?

A) Interest.
B) Dividends.
C) Capital gains.
D) All of these answer choices are correct.

Question 30

Which of the following refers to owning property as the sole owner?

A) Title.
B) Fee simple.
C) Tenancy by the entirety.
D) Community property.

Question 31

How much is the penalty for withdrawing funds from your IRA early?

A) 10%.
B) 12%.
C) 15%.
D) 20%.

Question 32

How is the money taxed that is withdrawn from a traditional IRA during your retirement?

A) It's taxed as ordinary income.
B) It's tax-deferred and not taxed in the year that it is withdrawn.
C) It's taxed as capital gains.
D) It's not taxed.

Question 33

Mia contributed $100,000 to a Roth IRA. She retired at age 61 and would like to withdraw the funds. She is in the 15% federal marginal tax bracket. How much will she pay in income taxes on the funds?

A) $15,000.
B) $15,000 plus a 10% penalty.
C) $12,500.
D) $0.

Question 34

Which of the following refers to an account that includes a designation of one or more beneficiaries who will receive the assets when the account owner dies?

A) Title.
B) Fee simple.
C) Payable on death.
D) Transfer on death.

Question 35

Which of the following refers to owning property equally with another person and each of you has the rights of survivorship?

A) Joint tenancy with right of survivorship.
B) Fee simple.
C) Tenancy by the entirety.
D) Community property.

Question 36

Mia contributed $25,000 to a Roth IRA. She retired at age 60 and would like to withdraw the funds. She is in the 25% federal marginal tax bracket. How much will she pay in income taxes on the funds?

A) $6,250.
B) $6,250 plus a 10% penalty.
C) $5,000.
D) $0.

Question 37

How is the money taxed that is withdrawn from a Roth IRA during your retirement?

A) It's taxed as ordinary income.
B) It's tax-deferred and not taxed in the year that it is withdrawn.
C) It's taxed as capital gains.
D) It's not taxed.

Question 38

Which of the following refers to an account that includes a designation of one or more beneficiaries who will receive the assets when the account owner dies for brokerage account assets?

A) Title.
B) Fee simple.
C) Payable upon death.
D) Transfer on death.

Question 39

Which of the following refers to owning property with your spouse and residing in a designated state that allows this special form of titling?

A) Title.
B) Fee simple.
C) Tenancy by the entirety.
D) Community property.

Question 40

Mia contributed $75,000 to a traditional IRA. She just retired at age 55 and would like to withdraw the funds. She is in the 15% federal marginal tax bracket. How much will she pay in income taxes on the funds?

A) $11,250.
B) $11,250 plus a 10% penalty.
C) $12,500.
D) $0.

Question 41

Which of the following refers to a way that property can change ownership when someone dies?

A) Title.
B) Contract.
C) Will.
D) All of these answer choices are correct.

Question 42

Typically, how many adults must witness a will?

A) One.
B) Two.
C) Three.
D) Four.

Question 43

Which of the following refers to an account that can be established to ensure that stocks, bonds, mutual funds, and other investment assets transfer to a named beneficiary at death?

A) Joint tenants with right of survivorship.
B) Payable upon death.
C) Transfer on death.
D) All of these answer choices are correct.

Question 44

Which of the following is one of the best ways to avoid probate?

A) Owning property by fee simple.
B) Establishing a trust.
C) Owning property using a title.
D) Probate cannot be avoided.

Question 45

Which of the following refers to a way that property transfers from one person to another after the owner dies?

A) Joint tenants with right of survivorship.
B) Payable upon death.
C) Transfer on death.
D) All of these answer choices are correct.

Question 46

Which of the following refers to someone who died with a will?

A) Testate.
B) Intestate.
C) Title.
D) Contract.

Question 47

Which of the following refers to a document with the purpose of transferring property of a person who has died according to his or her wishes?

A) Title.
B) Fee simple.
C) Will.
D) Contract.

Question 48

Which of the following refers to someone who died without a will?

A) Testate.
B) Intestate.
C) Title.
D) Contract.

Question 49

Which of the following is an element of a will?

A) Signed.
B) Witnessed.
C) Properly executed.
D) All of these answer choices are correct.

Question 50

Which of the following refers to an irrevocable and a voluntary transfer of property to another person while alive?

A) Testate.
B) Gift.
C) Title.
D) Bequest.

Question 51

Which of the following is an element of a will?

A) Legal age.
B) Sound mind.
C) Intention.
D) All of these answer choices are correct.

Question 52

Which of the following refers to a way that property is titled that will automatically transfer to the co-owner?

A) Joint tenants with right of survivorship.
B) Payable upon death.
C) Transfer on death.
D) All of these answer choices are correct.

Question 53

Which of the following refers to someone who establishes a trust?

A) Beneficiary.
B) Grantor.
C) Trustee.
D) Remainder beneficiary.

Question 54

Which of the following is the typical legal age to have a will?

A) 16.
B) 18.
C) 20.
D) 21.

Question 55

Which of the following refers to a trust that once established cannot be changed?

A) Testamentary trust.
B) Irrevocable living trust.
C) Revocable living trust.
D) Transfer on death.

Question 56

Which of the following refers to a trust that is created through a will?

A) Testamentary trust.
B) Irrevocable living trust.
C) Revocable living trust.
D) Transfer on death.

Question 57

Which of the following refers to a trust that allows the grantor to do whatever he or she wants with the trust assets while alive?

A) Testamentary trust.
B) Irrevocable living trust.
C) Revocable living trust.
D) Transfer on death.

Question 58

Which of the following involves leaving property to another party after death through a will?

A) Testate.
B) Gift.
C) Title.
D) Bequest.

Question 59

Which of the following refers to a title that is used on bank accounts to transfer cash and assets to someone else?

A) Joint tenants with right of survivorship.
B) Payable upon death.
C) Transfer on death.
D) All of these answer choices are correct.

Question 60

Which of the following refers to a document that is a legally enforceable agreement between two or more parties?

A) Title.
B) Fee simple.
C) Will.
D) Contract.

Question 61

Which of the following comes into effect when a predetermined event happens?

A) General POA.
B) Durable POA.
C) Limited POA.
D) Springing POA.

Question 62

Which of the following provides guidance and advice on all aspects of your financial situation, sometimes thought of as your "financial quarterback"?

A) Financial planner.
B) Financial counselor.
C) Financial advisor.
D) Tax advisor.

Question 63

Which of the following is an example of life-sustaining treatment or lack thereof?

A) Only food.
B) No artificial support at all.
C) Only water and pain medication.
D) All of these answer choices are correct.

Question 64

Which of the following provides very broad powers?

A) General POA.
B) Durable POA.
C) Limited POA.
D) Springing POA.

Question 65

Which of the following limits your agent to act only in specific ways for a restricted amount of time?

A) General POA.
B) Durable POA.
C) Limited POA.
D) Springing POA.

Question 66

Which of the following provides specialized advice on tax and IRS questions and prepares tax returns?

A) Financial planner.
B) Financial counselor.
C) Financial advisor.
D) Tax advisor.

Question 67

Which of the following applies to a durable POA?

A) Agent has limited powers.
B) Agent has specific powers.
C) Agent has broad powers.
D) Terminates with disability or incapacitation.

Question 68

Which of the following remains in force throughout the duration spelled out in the document, regardless of any disability or incapacitation?

A) General POA.
B) Durable POA.
C) Limited POA.
D) Springing POA.

Question 69

What is the youngest legal age to have a living will?

A) 16.
B) 18.
C) 20.
D) 21.

Question 70

Which of the following instructs doctors, hospitals, nursing care facilities, and other health professionals to withhold CPR and other measures that can facilitate breathing if a situation arises when these procedures are recommended?

A) Will.
B) Do-not-resuscitate (DNR) declaration.
C) Living will.
D) Healthcare proxy.

Question 71

Which of the following is an example of when a living will comes into effect?

A) You have had a car accident.
B) You are diagnosed as being in a persistent comatose condition or in a persistent vegetative state.
C) You have broken a bone.
D) You have had a surgery.

Question 72

Which of the following refers to a legal document that is used to direct a physician or hospital about the types of medical treatment someone wants or does not want in case the person becomes incapacitated?

A) Title.
B) Living will.
C) Will.
D) Contract.

Question 73

Which of the following provides advice designed to help you fix past financial problems?

A) Financial planner.
B) Financial counselor.
C) Financial advisor.
D) Tax advisor.

Question 74

Which of the following provides legal advice and counsel and can draft legal documents?

A) Financial planner.
B) Financial counselor.
C) Legal advisor.
D) Tax advisor.

Question 75

Which of the following refers to legal documents that allow a named person, often an agent, to act on your behalf?

A) Will.
B) DNR.
C) Power of attorney (POA).
D) Living will.

Question 76

Without a living will, who makes the decisions regarding life-sustaining treatment?

A) A family member.
B) The courts.
C) A friend.
D) The doctor.

Question 77

Which of the following refers to a person who could make sure your wishes are known to the medical team?

A) Healthcare proxy.
B) Family member.
C) Living will.
D) Advanced directive.

Question 78

Which of the following is an example of a common use of a POA?

A) Helping a relative who is temporarily incapacitated or injured.
B) Allowing your accountant to talk to the Internal Revenue Service (IRS) about your financial and tax situation.
C) Allowing a financial advisor to manage your portfolio and make investment decisions for you.
D) All of these answer choices are correct.

Question 79

Which of the following provides advice on one or a few financial topics and tends to be product focused?

A) Financial planner.
B) Financial counselor.
C) Financial advisor.
D) Tax advisor.

Question 80

Which of the following applies to a limited POA?

A) Agent has limited powers, only.
B) Terminates with disability or incapacitation, only.
C) Agent has limited powers and terminates with disability or incapacitation.
D) Agent has broad powers.