Incentives for Saving TEST

Money received for work or through investments

• Expenses

• Red Rooster

• Income

• Jake th Peg's Extra Leg

a sum of money deposited into an account that is expected to provide some future benefit, usually involving some level of risk

• investments

• income

• Billy Bob Jenkin's Car

• Mixed Expense

excused from being taxed

• Taxi Exit

• Snoop Dog

• Tax Pimped

• Tax Exempt

Tags

CCSS.RF.3.3B

CCSS.RF.3.3C

CCSS.RF.3.3D

CCSS.RF.4.3A

CCSS.RF.5.3A

Which sentence best describes an incentive for saving for education with a 529 plan?

• The income generated by a 529 plan is tax exempt.

• Colleges offer a reduced price for tuition paid for with funds from a 529 plan.

• There is no penalty if withdrawals are made for non-education-related expenses.

• The income generated by a 529 plan is tax deferred.

Which three expenses could money invested in a 529 plan be used for without penalty?

• room and board

• textbooks

• tuition

• gas

• clothes

Mauricio’s retirement account allows him to delay paying taxes on contributions until he withdraws the money at retirement. Which statement describes Mauricio’s contributions?

• The contributions are tax exempt because they will be taxed at a minimal rate.

• The contributions are tax deferred because they will be taxed at a minimal rate.

• The contributions are tax exempt because they will be taxed in the future.

• The contributions are tax deferred because they will be taxed in the future.

Which sentence about flexible spending accounts (FSAs) is true?

• The funds in the account remain for as long as you’re employed by the company sponsoring the FSA.

• Contributions are taxed when funds are withdrawn to use on qualified expenses.

• Contributions are made with pretax dollars.

• There is no contribution limit.

Which statement describes the key difference between a traditional IRA and a Roth IRA?

• A traditional IRA is an employer-sponsored program, while a Roth IRA is opened and managed by an individual.

• A Roth IRA is an employer-sponsored program, while a traditional IRA is opened and managed by an individual.

• Roth IRA contributions are made with pretax dollars, while traditional IRA contributions are made with after-tax dollars.

• Traditional IRA contributions are made with pretax dollars, while Roth IRA contributions are made with after-tax dollars.

401k

• offered by a company to employees

• opened and managed by an individual

• offered by a nonprofit organization to employees

IRA

• offered by a company to employees

• opened and managed by an individual

• offered by a nonprofit organization to employees