Retirement Plan Fundamentals Quiz

Test your retirement planning knowledge with these 19 questions covering 401(k), IRA, and other retirement accounts.

Practice Learn Test

What is the purpose of the Required Minimum Distribution (RMD) rule in retirement accounts?

To encourage early withdrawals

To limit contributions

To ensure a minimum income flow in retirement

To avoid taxation

What is the term for the strategy of gradually shifting investments to less risky options as an individual approaches retirement?

Asset allocation

Dollar-cost averaging

Rebalancing

Lifecycle investing

What is the purpose of a target-date fund in a retirement portfolio?

To invest in high-risk assets

To provide guaranteed returns

To automatically adjust asset allocation based on the investor's target retirement date

To offer tax advantages

What is the term for the period during which an individual is actively contributing to their retirement accounts and building savings?

Accumulation phase

Distribution phase

Maturity phase

Withdrawal phase

What is the purpose of a spousal IRA?

To provide tax credits for married couples

To allow a non-working spouse to contribute to an IRA

To fund education expenses for a spouse

To offer higher contribution limits

What is the maximum contribution limit for an individual's 401(k) plan in 2022?

$10,000

$18,500

$25,000

$50,000

Which of the following retirement accounts is known for providing tax-free withdrawals in retirement?

Traditional IRA

Roth IRA

401(k)

SEP IRA

At what age can individuals start making catch-up contributions to their retirement accounts?

Which of the following is NOT a common investment option in a 401(k) plan?

Stocks

Bonds

Real Estate

Cryptocurrency

#10

What is the maximum annual contribution limit for a Traditional IRA in 2022?

$5,000

$6,000

$7,000

$8,000

#11

Which type of retirement plan is designed for small businesses and self-employed individuals?

403(b)

SEP IRA

401(k)

Simple IRA

#12

What is the penalty for failing to take the Required Minimum Distribution (RMD) from a retirement account?

10%

15%

50%

#13

What is the penalty for early withdrawal from a 401(k) before the age of 59½?

10%

15%

20%

#14

Which retirement plan allows self-employed individuals to contribute both as an employer and an employee?

Simple IRA

Solo 401(k)

Keogh Plan

403(b)

#15

What is the primary advantage of a Roth IRA over a Traditional IRA?

Tax-free withdrawals in retirement

Tax-deductible contributions

Higher contribution limits

Early withdrawal penalties

#16

In a 403(b) plan, which group of employees is typically eligible to participate?

Government employees

Small business owners

Self-employed individuals

Non-profit organization employees

#17

What is the purpose of the Social Security Administration's Full Retirement Age (FRA)?

To determine eligibility for Medicare

To calculate early withdrawal penalties

To determine when retirees can receive full Social Security benefits

To set the age for catch-up contributions

#18

Which retirement plan allows contributions with pre-tax dollars and offers tax-deferred growth?

Roth IRA

Solo 401(k)

Keogh Plan

Traditional 401(k)

#19

What is the purpose of the 10% early withdrawal penalty on retirement accounts?

To encourage early retirement

To fund government programs

To discourage premature withdrawals

To offset administrative costs