Understanding Retirement Plans

What has largely replaced pension plans due to being less costly for employers?

• IRA

• Defined-benefit plans

• 401(k) retirement savings plan

• Social Security

What is a key feature of defined-benefit pension plans?

• Employee chooses the investment options

• Employer guarantees a specific monthly payment after retirement

• Contributions are optional

• Employer makes contributions based on performance

What age must you be to withdraw money from most retirement plans without penalty?

• 59 1/2

• 55

• 72

• 65

What is the maximum contribution limit to a 401(k) for those under 50 as of 2025?

• $23,500

• $19,500

• $61,000

• $30,500

What is a major difference between a Roth IRA and a traditional IRA?

• Roth IRA contributions are tax-deductible

• Traditional IRA allows for tax-free withdrawals

• Traditional IRA has no income limits for contributions

• Roth IRA allows for tax-free withdrawals at retirement

What is the primary disadvantage of 401(k) plans mentioned?

• No tax advantages

• Mandatory employer matching

• Limited investment choices

• Low contribution limits

What does IRA stand for?

• Investment Retirement Account

• International Retirement Association

• Individual Retirement Arrangement/Account

What is the contribution limit for a traditional IRA for those under 50 as of 2025?

• $23,000

• $7,500

• $7,000

• $6,000

At what age are you required to start withdrawing money from a 401(k)?

• 72

• 59 1/2

• 70

• 65

What is a unique feature of employer contributions to a 401(k) plan?

• They require immediate vesting

• They are matched dollar for dollar without limit

• They are taxed at the time of contribution

• They may be subject to a vesting schedule