Retirement Accounts

What are the tax advantages of a Roth IRA?

• Tax-deferred growth of investments, tax-free withdrawals in retirement, and no required minimum distributions.

• Tax-free withdrawals in retirement, tax-free growth of investments, and no required minimum distributions.

• Tax-free withdrawals in retirement, tax-deferred growth of investments, and no required minimum distributions.

• Tax-free withdrawals in retirement, tax-free growth of investments, and required minimum distributions.

What is the main difference between a Traditional IRA and a Roth IRA?

• Taxation

• Age requirement

• Account balance

• Investment strategy

What is the penalty for early withdrawal from a Traditional IRA?

• 5%

• 10%

• 15%

• 20%

What is the purpose of a 401(k) plan?

• The purpose of a 401(k) plan is to provide health insurance for employees.

• The purpose of a 401(k) plan is to offer paid time off for employees.

• The purpose of a 401(k) plan is to provide a bonus for employees.

• The purpose of a 401(k) plan is to provide a retirement savings vehicle for employees.

What is the age at which you can start making penalty-free withdrawals from a Traditional IRA?

• 55

• 65

• 50

• 59 1/2

You earn a gross monthly pay of $4000 and you contribute 10% to your 401k. Your employer matches your contribution. How much will be deposited to your 401k each month?

• $400
• $1000
• $800
• $2000

You put $40,000 in a traditional IRA this year that earns 4% interest compounded monthly. You are currently in the 12% federal income tax bracket. You keep your money in the account for 20 years. After 20 years, you earn a higher income and are in the 22% federal income tax bracket. How much tax will you pay when you withdraw your money in 20 years?

• 4055

• 12000
• 16000
• 19559

You put $40,000 in a Roth IRA this year that earns 4% interest compounded monthly. You are currently in the 12% federal income tax bracket. You keep your money in the account for 20 years. After 20 years, you earn a higher income and are in the 22% federal income tax bracket.

How much tax do you have to pay when you deposit the money?

• $9,600
• $8,800
• 0
• $4,800