GEB 3006 FINAL ACTUAL UPDATED
Exam Questions and CORRECT Answers
Employer benefits can be worth up to ___ of your base salary. - CORRECT ANSWER -
50%
Generally the two main employer benefits with the highest value are: - CORRECT
ANSWER - Retirement and health plans
Assume you have a 401-K plan and that your employer requires you to stay five years to "vest"
in the plan. If you leave the company in three years then, - CORRECT ANSWER - You
will lose the amount your employer contributed to the plan plus the earnings, but you will retain
your contributions and the earnings thereon
Which of the following health plans offers the most choice in doctors and has the highest cost? -
CORRECT ANSWER - PPO
Which of the following health plans generally requires that you first see your primary care
physician and remain within a restricted network of doctors? - CORRECT ANSWER -
HMO
Which of the following is TRUE?
-Health savings plan accounts can only be used for a PPO plan
-Unused flexible spending account balances may be carried forward to future years
-Flexible spending and health savings accounts are shown as reductions to your W-2 income, and
thus save federal taxes
-A health savings account must be used each year - CORRECT ANSWER - Flexible
spending and health savings accounts are shown as reductions to your W-2 income, and thus
save federal taxes
,After enrolling in your primary health insurance plan, which of the following is the next MOST
important insurance that all employees should sign up for during open enrollment? - CORRECT
ANSWER - Disability insurance
Assume the following:
Gross salary = $120,000
Employee contributions to 401-K = $12,000
Employer match to 401-K = $5,000
Flexible spending account savings = $2,000
Health insurance premiums paid by employee = $3,000
Health insurance paid directly by employer = $8,000
What is the W-2 taxable income? - CORRECT ANSWER - $103,000
An employer offers a 401-K plan under the following terms:
Employer will match 80% of all contributions up to 6%.
If an employee saves 10% of his/her salary, then the employer will match ___ of their salary. -
CORRECT ANSWER - 4.8%
Employees without a pension plan should try to save at least _____ of their salary (including
employer 401-K plan matches) throughout their working careers. - CORRECT
ANSWER - 10-15%
Fidelity Investments recommends that individuals without pensions have about ___ times their
salary at age 67 in order to have a sufficient amount of money to retire. - CORRECT
ANSWER - 10
Assume you receive a tax free benefit worth $1,000/year. What is the pretax equivalent of this
benefit for individuals in a 12% marginal tax bracket? - CORRECT ANSWER - $1,136
Assume you receive a taxable benefit worth $1,000/year. What is the after tax equivalent of this
benefit for individuals in a 24% marginal tax bracket? - CORRECT ANSWER - $760
, Fidelity Investments recommends that individuals without pensions have about ___ times their
salary at age 30 in order to have a sufficient amount of money to retire. - CORRECT
ANSWER -1
Assume you are in a 35% marginal tax bracket.
If you saved $2,000 in your flexible savings account, you will save ___ in taxes. - CORRECT
ANSWER - $700
Which of the following statements is TRUE?
-Employee contributions to social security are matched by their employer
-All W-2 earnings are subject to the 1.45% Medicare tax.
-All of the other answers are true
-If you are self employed, you will need to pay both the employee and employer share of your
social security and medicare tax
-The Social Security or FICA tax is 6.2% - CORRECT ANSWER - All of the other
answers are true
At what age will you become eligible for Medicare? - CORRECT ANSWER - 65
At what age are you eligible for early Social Security? - CORRECT ANSWER - 62, and
the amount received is a discounted benefit compared to the full retirement benefit
Which of the following statements is FALSE?
-Typically companies will offer severance benefits when there is a downsizing
-If you lose your job due to a layoff, you will be eligible for state unemployment benefits
-If you are offered a chance to "resign" instead of being fired, then this might look better on your
resume.
-If you accepted a chance to "resign" instead of being fired, then you are still eligible for state
unemployment benefits. - CORRECT ANSWER - If you accepted a chance to "resign"
instead of being fired, then you are still eligible for state unemployment benefits.
Exam Questions and CORRECT Answers
Employer benefits can be worth up to ___ of your base salary. - CORRECT ANSWER -
50%
Generally the two main employer benefits with the highest value are: - CORRECT
ANSWER - Retirement and health plans
Assume you have a 401-K plan and that your employer requires you to stay five years to "vest"
in the plan. If you leave the company in three years then, - CORRECT ANSWER - You
will lose the amount your employer contributed to the plan plus the earnings, but you will retain
your contributions and the earnings thereon
Which of the following health plans offers the most choice in doctors and has the highest cost? -
CORRECT ANSWER - PPO
Which of the following health plans generally requires that you first see your primary care
physician and remain within a restricted network of doctors? - CORRECT ANSWER -
HMO
Which of the following is TRUE?
-Health savings plan accounts can only be used for a PPO plan
-Unused flexible spending account balances may be carried forward to future years
-Flexible spending and health savings accounts are shown as reductions to your W-2 income, and
thus save federal taxes
-A health savings account must be used each year - CORRECT ANSWER - Flexible
spending and health savings accounts are shown as reductions to your W-2 income, and thus
save federal taxes
,After enrolling in your primary health insurance plan, which of the following is the next MOST
important insurance that all employees should sign up for during open enrollment? - CORRECT
ANSWER - Disability insurance
Assume the following:
Gross salary = $120,000
Employee contributions to 401-K = $12,000
Employer match to 401-K = $5,000
Flexible spending account savings = $2,000
Health insurance premiums paid by employee = $3,000
Health insurance paid directly by employer = $8,000
What is the W-2 taxable income? - CORRECT ANSWER - $103,000
An employer offers a 401-K plan under the following terms:
Employer will match 80% of all contributions up to 6%.
If an employee saves 10% of his/her salary, then the employer will match ___ of their salary. -
CORRECT ANSWER - 4.8%
Employees without a pension plan should try to save at least _____ of their salary (including
employer 401-K plan matches) throughout their working careers. - CORRECT
ANSWER - 10-15%
Fidelity Investments recommends that individuals without pensions have about ___ times their
salary at age 67 in order to have a sufficient amount of money to retire. - CORRECT
ANSWER - 10
Assume you receive a tax free benefit worth $1,000/year. What is the pretax equivalent of this
benefit for individuals in a 12% marginal tax bracket? - CORRECT ANSWER - $1,136
Assume you receive a taxable benefit worth $1,000/year. What is the after tax equivalent of this
benefit for individuals in a 24% marginal tax bracket? - CORRECT ANSWER - $760
, Fidelity Investments recommends that individuals without pensions have about ___ times their
salary at age 30 in order to have a sufficient amount of money to retire. - CORRECT
ANSWER -1
Assume you are in a 35% marginal tax bracket.
If you saved $2,000 in your flexible savings account, you will save ___ in taxes. - CORRECT
ANSWER - $700
Which of the following statements is TRUE?
-Employee contributions to social security are matched by their employer
-All W-2 earnings are subject to the 1.45% Medicare tax.
-All of the other answers are true
-If you are self employed, you will need to pay both the employee and employer share of your
social security and medicare tax
-The Social Security or FICA tax is 6.2% - CORRECT ANSWER - All of the other
answers are true
At what age will you become eligible for Medicare? - CORRECT ANSWER - 65
At what age are you eligible for early Social Security? - CORRECT ANSWER - 62, and
the amount received is a discounted benefit compared to the full retirement benefit
Which of the following statements is FALSE?
-Typically companies will offer severance benefits when there is a downsizing
-If you lose your job due to a layoff, you will be eligible for state unemployment benefits
-If you are offered a chance to "resign" instead of being fired, then this might look better on your
resume.
-If you accepted a chance to "resign" instead of being fired, then you are still eligible for state
unemployment benefits. - CORRECT ANSWER - If you accepted a chance to "resign"
instead of being fired, then you are still eligible for state unemployment benefits.
