Virtual Business: Personal Finance Lesson 16 Review

401K plans are so named because:

• You can only contribute up to $401,000

• Of the tax law that authorizes them

• Over 400,000 people have taken advantage of them

• None of these

What is the official retirement age, according to the U.S. government

• 59

• 65

• 70

• None of these

When should you begin saving for retirement?

• As soon as you enter the workforce

• Before age 50 and not after

• After age 50

• After age 55

Which of the following is a benefit of an employer-sponsored plan?

• Contributions are not taxed

• Employers don't match contributions

• Contributions are taxed a lower rate

• All of these

Which of the following is an example of a defined benefit plan?

• A pension

• Roth IRA

• 401K

• 1099INT

Social Security replaces about what percent of most people's pre-retirement income?

• 70%

• 40%

• 100%

• None of these

Which of the following is an example of a defined contribution plan?

• 1099INT

• Keogh Plan

• 409C

• Plough Plan

Contributions to which type of IRA are tax deductible

• Traditional IRA

• Roth IRA

• Goth IRA

• Non-traditional IRA

Why is it not a good idea to make early withdrawals from your 401K?

• You usually have to pay a strict penalty

• You cannot put the money back in once you take it out

• You will lose your tax-deferred status on the entire account

• You will only get 10% of what you withdraw

If you are a self-employed professional, which plan would work for you?

• Employer-sponsored 401K

• Traditional pension plan

• Keogh Plan

• Plough Plan