FPQP Mod 7
What are reasons why people delay savings for retirement - answer Procrastination
Confusion about how to begin
Poor cash management (cannot afford to save)
Misperception about being too young to start saving for retirement
College education funding
Paying off debt
Saving for a house
Costs of caring for aging parents
Not wanting to "lock up" money in a retirement plan
Employee elective deferrals to a 401(k) may be subject to which of the following vesting
schedules? - answerA)
Two- to six-year graded vesting
B)
Immediate vesting
C)
Three-year cliff vesting
D)
None of these
B: Employee deferrals are always 100% vested to the employee. Employer
contributions are subject to minimum vesting schedules, which would include both a
three-year cliff and two- to six-year graded vesting.
Which of the following retirement plan distributions is subject to 20% withholding? -
answerA)
A lump sum distribution from a 401(k) plan
B)
A rollover of IRA assets from one IRA to another
C)
None of these
D)
A direct transfer of IRA assets between IRA custodians
A:401(k) retirement plan benefits that are paid (or made payable) to an employee
(instead of the IRA custodian) in the form of a lump sum distribution are subject to 20%
withholding.
Which of these would an individual receive at full retirement age (FRA)? - answerA)
AIME
B)
, RMD
C)
PIA
D)
COLA
PIA: The primary insurance amount (PIA) is the dollar amount received at FRA. AIME is
the average indexed monthly earnings and is the inflation-adjusted average wages on
which the worker has paid Social Security taxes. It is used to then calculate the benefit.
RMD is the required minimum distribution from retirement plans. Social Security
benefits are subject to cost of living adjustments (COLAs).
What is the potential maximum contribution that a 51-year-old individual could make to
an IRA account in 2021? - answer7000
For 2021, the maximum IRA contribution amount is $6,000, but there is also a $1,000
catch-up contribution amount available for those who are age 50 or older. Therefore, the
maximum contribution for a 51-year-old would be $7,000.
Which of these statements regarding SEP-IRAs is NOT correct? - answerA)
The plan works well for small businesses because of its simplicity.
B)
Earnings on the contributions grow tax-deferred.
C)
The plan only allows employer contributions.
D)
It is an IRA established by an employee.
D- SEP-IRAs are established by employers, not employees. All of the other statements
are correct.
Which of the following is a primary source of retirement income?
Medicare
Social Security
Savings and investments
Employer-provided retirement plans - answerII, III, IV
The three primary sources of retirement income are savings and investments,
employer-provided retirement plans, and Social Security. Medicare is health insurance
for individuals age 65 and older, not a source of income.
What would Julian's annual retirement benefit be if his highest years of compensation
was $77,000 on average, he had been working for the company for 33 years, and he
received 2% of compensation for each year of service as his retirement benefit? -
answer50,820
What are reasons why people delay savings for retirement - answer Procrastination
Confusion about how to begin
Poor cash management (cannot afford to save)
Misperception about being too young to start saving for retirement
College education funding
Paying off debt
Saving for a house
Costs of caring for aging parents
Not wanting to "lock up" money in a retirement plan
Employee elective deferrals to a 401(k) may be subject to which of the following vesting
schedules? - answerA)
Two- to six-year graded vesting
B)
Immediate vesting
C)
Three-year cliff vesting
D)
None of these
B: Employee deferrals are always 100% vested to the employee. Employer
contributions are subject to minimum vesting schedules, which would include both a
three-year cliff and two- to six-year graded vesting.
Which of the following retirement plan distributions is subject to 20% withholding? -
answerA)
A lump sum distribution from a 401(k) plan
B)
A rollover of IRA assets from one IRA to another
C)
None of these
D)
A direct transfer of IRA assets between IRA custodians
A:401(k) retirement plan benefits that are paid (or made payable) to an employee
(instead of the IRA custodian) in the form of a lump sum distribution are subject to 20%
withholding.
Which of these would an individual receive at full retirement age (FRA)? - answerA)
AIME
B)
, RMD
C)
PIA
D)
COLA
PIA: The primary insurance amount (PIA) is the dollar amount received at FRA. AIME is
the average indexed monthly earnings and is the inflation-adjusted average wages on
which the worker has paid Social Security taxes. It is used to then calculate the benefit.
RMD is the required minimum distribution from retirement plans. Social Security
benefits are subject to cost of living adjustments (COLAs).
What is the potential maximum contribution that a 51-year-old individual could make to
an IRA account in 2021? - answer7000
For 2021, the maximum IRA contribution amount is $6,000, but there is also a $1,000
catch-up contribution amount available for those who are age 50 or older. Therefore, the
maximum contribution for a 51-year-old would be $7,000.
Which of these statements regarding SEP-IRAs is NOT correct? - answerA)
The plan works well for small businesses because of its simplicity.
B)
Earnings on the contributions grow tax-deferred.
C)
The plan only allows employer contributions.
D)
It is an IRA established by an employee.
D- SEP-IRAs are established by employers, not employees. All of the other statements
are correct.
Which of the following is a primary source of retirement income?
Medicare
Social Security
Savings and investments
Employer-provided retirement plans - answerII, III, IV
The three primary sources of retirement income are savings and investments,
employer-provided retirement plans, and Social Security. Medicare is health insurance
for individuals age 65 and older, not a source of income.
What would Julian's annual retirement benefit be if his highest years of compensation
was $77,000 on average, he had been working for the company for 33 years, and he
received 2% of compensation for each year of service as his retirement benefit? -
answer50,820
