Deck 16: Retirement and Estate Planning

Question 1

A 401(k)plan is used to save for _________________.

A) College
B) Retirement
C) Unemployment
D) None of the options are correct

Answer 1

Retirement

Question 2

If you work for a company that will match $2 for every $1 contributed up to 5% of your salary of $50,000,what amount do you need to invest to receive the maximum company match?

A) $5,000
B) $2,500
C) $2,000
D) $1,250

Answer 2

$1,250

Question 3

The Social Security Act was signed into law in 1935 by President Franklin D. Roosevelt and was meant to provide a safety net against poverty brought on by all of these except:

A) Unemployment
B) Illness
C) Disability
D) All of the options are correct

Answer 3

All of the options are correct

Question 4

When you _________________ is when you should start putting money toward a retirement fund.

A) Are born
B) Get married
C) Get your first career job
D) Turn 18

Question 5

Which is not a reason to start saving for retirement?

A) Family
B) Sabbatical
C) Change of heart
D) None of the options are correct

Question 6

_________________ is the person who has written authority to act on your behalf if you are ill,incapacitated,or unable to manage your own affairs.

A) Attorney in fact
B) Estate handler
C) Personal assistant
D) Power of attorney

Question 7

How can you catch up on your retirement savings if you have not met your targeted amount?

A) Put off your date of retirement
B) Contribute more to your current retirement account
C) Plan to continue to work part-time into retirement
D) All of the options are correct

Question 8

Contributions into a Roth IRA are _________________.

A) Tax-deductible
B) Not tax-deductible
C) Two for one
D) Government matched

Question 9

What is another word for having a will?

A) Execution
B) Testate
C) Intestate
D) Willstate

Question 10

Social Security benefits are based on _________________.

A) Where you live
B) How much you have in retirement savings
C) Your average lifetime earnings of your 35 highest years of wages
D) what your company contributes toward your retirement savings

Question 11

When changing employment,your 401(k)account _________________.

A) Has to stay with your past employer
B) Is considered a withdrawal and taxes must be paid on the entire amount
C) Can be transferred to another plan administrator,like a mutual fund company or new employer's plan
D) Cannot be rolled over into an IRA

Question 12

What is a retirement plan that a small business employer or self-employed individual can establish?

A) 401(k)
B) SEP
C) IRA
D) All of the options are correct

Question 13

Which of the following is not an example of an individual retirement account?

A) Roth 401(k)plan
B) Traditional IRA
C) Roth IRA
D) Spousal IRA

Question 14

When calculating retirement income and Social Security,_________________.

A) Count on Social Security covering your retirement expenses
B) If you have a working spouse,you should both file for Social Security at the same time
C) If you have a working spouse,you should have the spouse with the higher income draw his or her Social Security last
D) If you have a working spouse,you should both file for Social Security as soon as you can while there is still money in the fund

Question 15

To be safe,you need _________________ of your preretirement annual salary to live comfortably at retirement.

A) 30%
B) 50%
C) 60%
D) 80%

Question 16

What is the one requirement to opening a traditional or a Roth IRA?

A) You must have money with which to open the account
B) You must have earned income
C) You must be 16 years old
D) You must have a parent cosign for you

Question 17

A spousal IRA is _________________.

A) A traditional or Roth IRA established and funded by an individual for his or her spouse
B) A retirement account that allows you to invest pretax income
C) A contribution made with money you have earned after paying your taxes
D) There is no such thing as a "spousal IRA"

Question 18

Once you start drawing on your Social Security retirement funds,_________________.

A) Your amount is set for life
B) You will receive an adjustment for inflation on your birthday
C) The amount you receive will be recalculated based on your life expectancy and your physician's report of your health
D) You will receive an annual adjustment each January for inflation most years

Question 19

When creating a will,who is the person that will tend to your estate according to your wishes?

A) Tender
B) Perpetrator
C) Executor
D) Lawyer

Question 20

If you work for a company that will match $2 for every $1 contributed up to 5% of your salary of $50,000,what is the maximum amount of free money from the company that you can earn this year?

A) $5,000
B) $2,500
C) $2,000
D) $1,250

Question 21

A charitable contribution is tax deductible if ____________.

A) The group is a non-profit
B) It is given to an individual
C) It is a contribution to a political campaign
D) You are donating your time

Question 22

A(n)_________________ is a document that expresses your wishes regarding medical treatment in the event of incapacitation.

A) Advance directive
B) Durable power of attorney for health care
C) Living will
D) Power of attorney

Question 23

A letter to your heirs and your executor outlining your wishes for your funeral arrangements,who to notify in the event of your death,and other wishes is called a:

A) Will
B) Testate
C) Letter of intent
D) Bypass trust

Question 24

In a Roth 401(k)plan _________________.

A) The money you put in is taxed when withdrawn
B) The money you put in is not taxed when withdrawn
C) The money you put in is only taxed when withdrawn before age 59
D) The money you put in cannot be withdrawn until retirement

Question 25

A person who has made a legally valid will is _________________.

A) Intestate
B) Testate
C) Relaxed
D) Impoverished

Question 26

Which of the following is an executor allowed to do?

A) Distribute the assets of the estate
B) Make final decisions on burial details
C) Contradict what is said in the will
D) All of the options are correct

Question 27

A(n)_________________ is a legal document that designates another person to act on your behalf.

A) Advance directive
B) Durable power of attorney for health care
C) Living will
D) Power of attorney

Question 28

You give $1,000,000 to your college in an irrevocable trust with the stipulation that you receive the earnings from the gift.You are guaranteed an annual 5% return on your investment.What will your income be from your gift?

A) $50,000
B) $100,000
C) $500,000
D) You cannot determine this without knowing your marginal tax rate

Question 29

Which of the following documents should you make accessible for your executor?

A) Insurance policies
B) Military services records
C) Divorce papers
D) All of the options are correct

Question 30

In 2010,an individual could give away up to what amount without paying a gift tax?

A) $10,000
B) $13,000
C) $15,000
D) No amount can be given tax-free

Question 31

Which of the following items is not of note for tax purposes?

A) The market value of clothing given to Good Will
B) The appraised value of art given to your university
C) Cash given to the Teacher Appreciation Fund
D) The blue book price of a car donated to the Crisis Center

Question 32

Steve died in a car accident.He never had a will made so he died _________________.

A) Testate
B) Executor
C) Intestate
D) Attorney of fact

Question 33

A(n)_________________ is a document that outlines your preferences or your directions for the administration and the withdrawal or withholding of life-sustaining medical treatment in the event of terminal illness or permanent unconsciousness.

A) Advance directive
B) Durable power of attorney for health care
C) Living will
D) Power of attorney

Question 34

A(n)_________________ becomes effective upon you becoming incompetent or unable to manage your affairs.

A) Advance directive
B) Durable power of attorney for health care
C) Living will
D) Power of attorney

Question 35

What happens if you die without a will?

A) The executor tends to your account
B) The court determines who gets what
C) Your goods will be auctioned
D) Your siblings will disperse your money between themselves

Question 36

A(n)_________________ trust is a trust for the benefit of the spouse and/or children that allows you to avoid paying estate taxes on life insurance proceeds.

A) Revocable
B) Bypass
C) Charitable remainder
D) Irrevocable

Question 37

To qualify for a deduction,which of the following is not true when making a donation?

A) Works of art must be valued at the garage sale price
B) A receipt needs to be received
C) The amount over the cost of a meal can be deducted when spending money on a dinner supporting a cause
D) Donations to an individual,political campaign contributions,raffle tickets,and time cannot be deducted

Question 38

Which of the following can you not deduct from your income taxes?

A) Cash donations
B) Clothing and household items
C) Used cars,art,stock,and other goods
D) Cost of dinner at a benefit

Question 39

What must you do to deduct donations to a political campaign from your taxes?

A) Donate at least $1,000
B) Select a party to support on your tax return
C) Retain the receipt for one year
D) Maintain a receipt for the IRS

Question 40

What is it called when someone dies without having a valid will?

A) Testate
B) Living will
C) Intestate
D) None of the options are correct

Question 41

What are the pros and cons involved in deciding when to start drawing Social Security benefits?

Question 42

A bypass trust allows married people to avoid certain taxes after death.

Question 43

What is the difference between a 401(k)and a Roth IRA?

Question 44

Deposits into a Roth IRA are tax deductible.

Question 45

Those who are self-employed can invest in a simplified employee pension plan.

Question 46

What are the two basic mechanisms for transferring property to individuals free of gift tax?

Question 47

The Internal Revenue Code provides two mechanisms for transferring property to individuals free of gift tax: the lifetime gift tax exemption and the annual exclusion amount.

Question 48

If you have 10 children and you and your spouse want to maximize the amount you can give to each child each year before you have to pay gift tax (use the 2010 rate),what is the maximum amount each child can receive each year?

A) $13,000
B) $26,000
C) $130,000
D) $260,000

Question 49

Regardless of your tax bracket,once in retirement,you do not have to pay taxes on earnings from a 401(k)plan.

Question 50

Estate and inheritance taxes are levied at the passing of your property at the time of your death.

Question 51

Why is it important to have a will?

Question 52

If you have 10 children and you and your spouse want to maximize the amount you can give to each child each year before you have to pay gift tax,what would the total gifts be each year?

A) $13,000
B) $26,000
C) $130,000
D) $260,000

Question 53

Charitable remainder trusts have tax advantages but provide no estate planning benefits.