Benefits and Pay (Personal Finance)

Imagine Benjamin, Maya, and Nora are planning for their golden years of retirement. They're in a lively debate over which retirement account offers the joy of tax-free withdrawals in retirement. Can you help them settle this?

• 401(k)

• Traditional IRA

• Roth IRA

• 403(b)

Imagine William and Maya are discussing retirement plans over coffee. William, who works in the private sector, is all about the 401(k), while Maya, who's making a difference at a non-profit, is a fan of the 403(b). Elijah, curious, asks: What's the primary difference between a 401(k) and a 403(b) retirement plan?

• 401(k) plans are only for public sector employees, while 403(b) plans are for private sector employees.

• 403(b) plans are only for non-profit and public education employees, while 401(k) plans are for private sector employees.

• There is no difference; they are the same.

• 401(k) plans offer higher contribution limits than 403(b) plans.

Imagine Abigail, Aiden, and Anika are having a lively debate about retirement savings. Suddenly, Aiden asks, 'Which of the following is NOT a characteristic of a Traditional IRA?'

• Contributions are tax-deductible.

• Withdrawals in retirement are tax-free.

• Taxes on earnings are deferred until withdrawal.

• There are age limits for contributions.

Imagine Ava, Arjun, and Kai are planning their future retirements. They're curious at what age they can start making penalty-free withdrawals from a 401(k) or Traditional IRA, under normal circumstances. Can you help them figure it out?

• 55

• 59 1/2

• 62

• 65

Imagine Anika, William, and Charlotte are discussing their dream jobs at a cozy cafe. Anika dreams of a job that offers great health perks, while William is all about saving for the future. Charlotte, always the planner, mentions various benefits employers offer. Which of the following benefits, brought up by Charlotte, is typically offered by employers and is NOT a retirement plan?

• Health insurance

• 401(k)

• Roth IRA

• 403(b)

Imagine Nora and Lily are discussing retirement plans over coffee. Nora, who's just started her first job, is curious about the benefits of a Roth IRA. Lily, a bit of a finance whiz, explains the main advantage of a Roth IRA over a Traditional IRA for young workers like them. What does she say?

• Roth IRA contributions are tax-deductible.

• Roth IRA allows for earlier withdrawals without penalties.

• Roth IRA offers tax-free growth and withdrawals in retirement.

• Roth IRA has higher contribution limits.

Imagine Michael, David, and James are discussing their future financial plans over coffee. Michael mentions 401(k) plans and sparks a lively debate. Which of the following statements about 401(k) plans did Michael correctly identify as FALSE?

• Employers can match a portion of your contributions.

• Your contributions are taxed at the time of withdrawal.

• You can borrow money from your 401(k) plan.

• Contributions are always tax-deductible.

Hey there! Imagine Liam, Ethan, and Jackson are planning their financial futures. They're curious about how much they can contribute to a Roth IRA in 2023, considering they're all under 50 years old. Can you help them figure it out?

• $5,500

• $6,000

• $6,500

• $7,000

Hey there! Oliver, Liam, and Ethan are having a debate about 403(b) plans. They're curious, which of the following is a unique characteristic of 403(b) plans?

• They are available to any employee in the United States.

• They offer tax-free loans to participants.

• They often include a provision for additional catch-up contributions for employees with 15 or more years of service.

• They require employer matching contributions.

Imagine Ethan, Liam, and William are discussing the perks of their new jobs. Ethan mentions the primary benefit of employer matching in a 401(k) plan. What does he say it is?

• It reduces the employee's taxable income.

• It allows employees to contribute beyond the annual limit.

• It provides additional funds to the employee's account, essentially free money.

• It enables earlier withdrawals without penalties.