Dave Ramsey Chapter 11

The company Jason works for matches 100% of his 401(k) contribution up to 5% of his gross income. Jason’s gross income per month is $4,000. If he contributes $200 per month to his 401(k) plan, what is the total contribution amount at the end of 12 months?

• $1,200

• $2,520

• $4,800

• $5,000

What definition best explains an IRA?

• A type of investment at a bank

• A type of investment at a bank or investment firm that has good tax benefits

• The tax treatment on virtually any type of investment

• Investment that uses pre-tax dollars

The primary difference between the Roth IRA and a traditional IRA is:

• The traditional IRA allows a contribution amount of $5,000 for non-income producing spouses; the Roth IRA doesn’t.

• The Roth IRA grows tax free; the traditional IRA doesn’t.

• Contributions to your Roth IRA are pre-tax; contributions to a traditional IRA are after-tax.

• A traditional IRA grows tax free; the Roth IRA doesn’t.

Under which condition are you not able to make a tax-free withdrawal from your Roth IRA?

• Over 59 and a half years old

• First-time home purchase up to $10,000

• Career change and temporary drop of income

• Death or disability

What is the best option for your retirement plan when you leave a company?

• Have the money sent to you and deposit it into a new IRA within 60 days.

• Do a direct transfer into an IRA.

• Leave the plan where it is so it can continue to accrue interest.

• Cash out the plan and invest in good mutual funds.

If you have $3,000 invested in a Roth IRA, what is true about your contribution?

• You have already paid taxes on the money, so it will grow tax free.

• You will pay taxes only on the growth of $3,000.

• You have maxed out your contribution.

• Both a and b

Which of the following is a good way to save for college?

• ESA

• Life insurance

• Pre-paid college tuition

• Savings bonds

Using the Rule of 72, how long will it take your money to double at 12% interest?

• 6 years

• 7.2 years

• 8 years

• 9 years

When seeking a financial counselor to help you with your investments, always go with:

• A close family member or friend because you will be helping each other out

• A financial counselor who is sophisticated and uses all of the right vocabulary

• A financial counselor with the heart of a teacher who explains everything to you

• A financial counselor who has at least five years’ experience

What does Baby Step 5 say about saving for your children’s college?

• Use tax-favored plans

• Use pre-paid college tuition

• Use a Certificate of Deposit

• Use insurance or savings bonds