#1
What is an annuity?
A type of investment that provides regular payments over a set period or for life
ExplanationProvides regular payments over time.
#2
What is a defined benefit pension plan?
A retirement plan where the employer promises a specified monthly benefit at retirement
ExplanationEmployer promises a specific monthly benefit.
#3
What is a 401(k) plan?
A retirement savings plan sponsored by an employer
ExplanationEmployer-sponsored retirement savings.
#4
What is the main advantage of an immediate annuity?
The ability to provide a guaranteed income stream for life
ExplanationGuaranteed lifetime income.
#5
What is the key characteristic of a fixed annuity?
Guaranteed minimum interest rate
ExplanationGuaranteed interest rate.
#6
What is the 'annuitization phase' in an annuity?
The period when the annuity payments begin
ExplanationStart of annuity payments.
#7
Which of the following is NOT a factor to consider when choosing a retirement income option?
Employment status
ExplanationNot relevant to retirement income options.
#8
What is the main risk associated with a variable annuity?
Market risk
ExplanationRisk linked to market fluctuations.
#9
What is the purpose of a qualified longevity annuity contract (QLAC)?
To provide income later in retirement to address longevity risk
ExplanationAddressing longevity risk in retirement.
#10
What is the primary benefit of a Roth IRA over a traditional IRA for retirement savings?
Tax-free withdrawals in retirement
ExplanationWithdrawals are tax-free in retirement.
#11
What is the penalty for withdrawing funds from a traditional IRA before age 59½?
10% penalty plus ordinary income tax
ExplanationPenalty and tax on early withdrawals.