Retirement Investment Quiz

What is one of the most popular retirement investment accounts mentioned in the document?

• Roth IRA

• Traditional IRA

• 401(k)

• Pension

Opening an employer-provided 401(k) or an IRA is just the first step towards investing for retirement. What other action do you need to take? Why?

• Start a savings account for emergencies.

• Invest in a diversified portfolio.

• Purchase a life insurance policy.

• Open a checking account.

Why might someone want to open an IRA as their retirement account?

• To avoid paying any taxes.

• To have more investment options.

• To receive employer matching contributions.

• To access funds before retirement age.

What is one noticeable difference between an IRA and a 401(k)?

• IRAs are only available through employers.

• 401(k)s offer more investment options.

• IRAs have more flexible contribution limits.

• 401(k)s often include employer matching.

Select the best definition of an IRA.

• An IRA is a tax-advantaged investing tool set up by individuals for retirement savings

• An IRA is a retirement plan offered to you by your employer

• An IRA is an investment type with a fixed rate of return

• An IRA is a retirement savings plan that guarantees a fixed rate of return

Select all of the statements that are a true characteristic of a Traditional IRA. (hint: choose 2 correct answers)

• Any money you save into a Traditional IRA is tax deductible

• There is no limit on the amount of money you can contribute to a Traditional IRA

• You are taxed on the money in your Traditional IRA when you withdraw it in retirement (it is taxed as ordinary income)

• You never have to pay taxes when contributing money to a Traditional IRA

Select the TRUE characteristic of a Roth IRA.

• There is no limit to the amount you can contribute to a Roth IRA

• The Roth IRA has been around longer than the Traditional IRA (the Roth debuted in the 1930s)

• The capital gains, interest, & growth of a Roth IRA can be withdrawn tax-free in retirement

• You are taxed on the money you withdraw in retirement from your Roth IRA (it is taxed as ordinary income)

True or False: You can only have ONE IRA account, so it is important to weigh the pros and cons of a Traditional vs a Roth IRA and choose wisely!

• True

• False

What is a 401k?

• A retirement account set up through your employer.

• A savings account for emergencies.

• A tax-exempt fund for higher education.

• A piggy bank fund

Which of these accounts will NOT change if you switch jobs?

• Roth IRA

• 401K