#1
Which of the following retirement plans allows contributions to grow tax-deferred until withdrawal?
401(k)
ExplanationTax-deferred growth of contributions until withdrawal.
#2
What is the main advantage of a 401(k) plan over a traditional pension plan?
Employee contribution control
ExplanationEmployees have control over contributions in a 401(k) plan.
#3
Which of the following is NOT a common type of employer-sponsored retirement plan?
Roth IRA
ExplanationRoth IRA is not a common employer-sponsored plan.
#4
What is the maximum annual contribution limit for a 401(k) plan in 2024?
$19,500
ExplanationMaximum annual contribution limit for a 401(k) in 2024 is $19,500.
#5
Which retirement plan is specifically designed for employees of public schools, tax-exempt organizations, and certain ministers?
403(b)
Explanation403(b) is designed for employees of public schools, tax-exempt orgs, and certain ministers.
#6
What is the purpose of vesting in an employee benefits plan?
To determine eligibility for benefits
ExplanationVesting determines when employees gain eligibility for benefits.
#7
Which retirement account allows for penalty-free withdrawals for qualified education expenses?
Roth IRA
ExplanationPenalty-free withdrawals for education expenses.
#8
In a defined contribution plan, who bears the investment risk?
Employee
ExplanationEmployees bear the investment risk in defined contribution plans.
#9
What is the penalty for early withdrawals from a traditional IRA before the age of 59 ½?
10% penalty plus taxes on the withdrawn amount
Explanation10% penalty plus taxes for early withdrawals.
#10
Which retirement plan allows self-employed individuals to contribute both as an employer and employee?
SEP IRA
ExplanationSEP IRA allows self-employed to contribute as employer and employee.
#11
Which of the following retirement plans does not have required minimum distributions (RMDs) starting at age 72?
Roth IRA
ExplanationRoth IRA does not have RMDs starting at age 72.
#12
What happens to the unused funds in a Health Savings Account (HSA) after retirement?
They can be rolled over to an IRA for retirement
ExplanationUnused HSA funds can be rolled over to an IRA.
#13
Which of the following retirement plans allows for catch-up contributions for individuals aged 50 and above?
401(k)
Explanation401(k) allows catch-up contributions for those aged 50 and above.
#14
What is the maximum annual catch-up contribution limit for individuals aged 50 and above for most employer-sponsored retirement plans?
$6,500
ExplanationMaximum annual catch-up contribution for individuals aged 50+ is $6,500.
#15
Which of the following retirement plans allows for tax-free withdrawals if certain conditions are met, such as disability?
457(b)
Explanation457(b) allows for tax-free withdrawals under certain conditions.