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Exam 18: Starting Early: Retirement Planning

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Question 21

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Sam Waterston has been making contributions into an individual retirement account to help pay for his children to go to college.Which type of account is he most likely using?

A) Traditional IRA
B) Roth IRA
C) SEP-IRA
D) Coverdell Education Savings Account
E) Rollover IRA

F) B) and D)
G) B) and C)

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Question 22

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Employees who are covered under the Railroad Retirement System are also covered by Social Security.

A) True
B) False

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Question 23

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Before you get a reverse mortgage of any kind,consider that:

If a rollover from a retirement fund or other IRA is not made directly to a similar employer-provided retirement plan or an IRA,there will be a mandatory federal income tax withholding equal to what percent of the taxable distribution?

Jeremiah Brown has been making contributions into an individual retirement account for his retirement.His contributions are not tax deductible but his earnings accumulate tax free.What type of individual retirement account does he have?

When a lender uses your house as collateral to buy an annuity for you from a life insurance company,it is called a reverse annuity mortgage or:

If you work after age 65,your Social Security benefit will increase by one-fourth of one percent for each month you delay retirement up until what age?

Most employer pension plans are either defined-contribution or defined-benefit plans.

The exact amount of money you will need in retirement can be predicted accurately.

A successful,happy retirement just doesn't happen; you have to plan for it.

Under a 401(k)plan,your employer makes nontaxable contributions to the plan for your benefit and reduces your salary by the same amounts.

To correctly divide retirement benefits during divorce,a couple needs to create a legal document called a qualified domestic relations order (QDRO).

ERISA established the Pension Benefit Guaranty Corporation.

As people reach retirement age,what is the most likely housing choice they would make? Assume they are moving to a new geographic area.

The amount of the minimum required distribution from an IRA at age 70½ is based on your life expectancy at the time of the distribution.

An annuity provides guaranteed income for life.

A defined-contribution plan has an individual account for each employee; therefore,these plans are also called individual account plans.

Your contribution to a Traditional IRA is fully tax deductible regardless of your earned income.

Profit-sharing plans and 401(k)plans are examples of defined-contribution plans.

Beverly Foster is planning for her retirement.She has determined that her car is worth $10,000,her home is worth $150,000,her personal belongings are worth $100,000,and her stocks and bonds are worth $300,000.She owes $50,000 on her home and $5,000 on her car.What step in the retirement planning process is Beverly completing?