1. Depending on the state, a 529 plan allows an individual to invest how much money tax free for college expenses?

A) $500,000 - $750,000

B) $250,000 - $380,000

C) $50,000 - $90,000

D) $100,000 - $225,000

2) Lori Watts favors the traditional IRA over the Roth IRA. What advantage does the traditional IRA have over the Roth?

A) Contributions are likely to be fully or partially tax deductible.

B) The earnings are tax-exempt, unlike a Roth IRA.

C) It saves tax money for education.

D) There are no penalties for early withdrawals.

3) If you receive $100,000 in retirement and are in a 26% tax bracket, how much will you receive after tax?

A) $100,000 B) $74,000 C) $126,000 D) $135,135

4) Your company pays retirement benefits to current retirees out of current earnings, on a pay-as-you-go basis. This is an example of a(n)

A) unfunded pension plan. B) cash balance plan. C) funded pension plan. D) none of the above.

5) The difference between a Money Purchase Plan and a Profit Sharing plan is that

A) with the Money Purchase Plan the contributions are required regardless of how the firm performs.

B) with the Profit Sharing Plan the employee is guaranteed to see profits in their retirement funds.

C) Profit Sharing Plans constantly outperform Money Purchase Plans.

D) all of the above are correct.

E) both A and C are correct.

6) Retirement income comes from which of the following sources?

A) Social Security B) Pensions C) Earnings D) Asset income E) All of the above

7) A ________ option provides payments over the life of both you and your spouse no matter how long you live.

A) combination annuity

B) lump sum annuity

C) annuity for life

D) single life annuity

E) joint and survivor annuity

8) In the highest income quintiles, the majority of retirement income comes from

A) Social Security.

B) asset income.

C) pensions.

D) earnings.

9) Which of the following statements about saving for college is not true?

A) If the money in a Coverdell Education Savings Account isn't used for college, taxes and penalties may apply.

B) You must open a 529 plan sponsored by the state in which you reside.

C) Some 529 plans are prepaid college tuition plans.

D) 529 college savings plans offer more flexibility than prepaid college tuition plans.

E) The Coverdell Education Savings Account works just like the Roth IRA, except with respect to contributions.

10) Fred and Carlie want to save some money for a down payment on a house. They figure it will take at least 10 years to save up enough money. Which of the following would be the best way for them to save this money?

A) Traditional IRA

B) Keogh Plan

C) Roth IRA

D) 529 Savings Plan

11) What are the advantages to a SIMPLE plan for retirement for the small business owners?

A) The plan works well for small business owners with 100 employees or less.

B) The plan is very easy to set up.

C) The small business owner has some flexibility in determining how much to contribute to the plan.

D) All of the above are correct.

E) Only A and B are correct.

12) Which of the following benefits is not provided by Social Security?

A) Disability B) Education C) Health D) Death E) Retirement

13) Reggie has two children. He is wanting to put money away for their college education. What type of plan can only be used for college and graduate school, and allows contributions of up to $250,000?

A) 403(b) B) 12b-4 C) 529 D) ESOP

14) Lucius starts saving $100 per month at age 25 and averages 6% per year compounded monthly. Hector starts saving $1,215.22 per month at age 55 and averages 6% per year compounded monthly. Who will be better off at age 65 assuming neither had in money in their account when they started?

A) Lucius will have $15,476.20 and Hector will have $16,017.57 at age 65.

B) Lucius will have $199,149.07 and Hector will have $163,879.34 at age 65.

C) They both will have the same amount of money in their accounts at age 65.

D) Not enough information available.

15) How is the size of a person's Social Security retirement benefits determined?

A) It depends on the number of years a person has paid Social Security taxes.

B) It depends on the number of credits earned in a person's lifetime.

C) It depends on the average level of earning over a person's lifetime.

D) All of the above are correct.

E) Only B and C are correct.