Retirement Plans Quiz

An ESOP (Employee Stock Ownership Plan) is generally more risky than retirement plans invested in diversified mutual funds.

• True

• False

Under a defined contribution plan, there are specific guidelines for all but

• how much you can contribute to your retirement fund.

• how much your employer can contribute to your retirement fund.

• early withdrawal penalties.

• estimating how much you will receive monthly at retirement.

The quality and timing of your retirement depend mainly on the quality of your employer's retirement plan.

• True

• False

To be eligible for Social Security retirement benefits on your own, you will need to have worked for at least 10 years, earned the minimum required income each year, and contributed to Social Security through payroll taxes.

• True

• False

If your employer offers a retirement plan, that should be the first plan that you consider because your employer will likely contribute to it.

• True

• False

Which of the following is true about a 401(k) plan?

• There is no penalty for early withdrawal of these funds.

• There is no limit on the dollar amount you can contribute.

• Your contributions are automatically vested and are yours, regardless of when you leave the firm.

• 401(k) contributions are made after taxes are paid on your salary.

In the past 10 years or so, many employers have shifted from defined-benefit to defined-contribution retirement plans.

• True

• False

The best way to save for retirement is to

• wait until after the bills are paid.

• have it deducted directly from your check.

• take a loan so you will pay it back fast.

Social Security is all but

• a good starting point to plan for your retirement funding.

• financed through working individuals and employers.

• a government benefit paid to the elderly and disabled.

• a specific savings plan, to which individuals contribute and from which they benefit.

Payments to Social Security are based on salary and made monthly by

• employees only.

• employers only.

• both employees and employers.

• everyone except self-employed people.