Financial Planning Questions

What is a 401(k) plan?

• A type of health insurance

• A retirement savings plan sponsored by an employer

• A government pension plan

• A type of mortgage

Which of the following is a benefit of a Roth IRA?

• A) Tax-deductible contributions

• B) Tax-free withdrawals in retirement

• C) Employer matching contributions

• D) Early withdrawal penalties

At what age can you start withdrawing from a traditional IRA without penalty?

• 55

• 59 ½

• 62

• 65

What is the maximum contribution limit for a 401(k) in 2025?

• $18,000

• $19,500

• $22,500

• $26,000

Which of the following is a characteristic of a defined benefit plan?

• Contributions are made by the employee only

• Benefits are based on a formula considering salary and years of service

• Investment risk is borne by the employee

• Contributions are tax-free

What is a key feature of a SEP IRA?

• It is only available to government employees

• It allows for higher contribution limits than traditional IRAs

• It requires mandatory employer contributions

• It offers tax-free withdrawals

Which of the following is true about Social Security benefits?

• They are only available to those who have never worked

• They are based on your highest 35 years of earnings

• They are tax-free

• They can be claimed at any age

What is the purpose of a catch-up contribution?

• To allow younger workers to contribute more

• To help older workers save more as they approach retirement

• To match employer contributions

• To reduce taxable income

Which of the following is a disadvantage of an annuity?

• Guaranteed income for life

• Tax-deferred growth

• High fees and surrender charges

• Protection against market downturns

What is the primary benefit of a Health Savings Account (HSA) in retirement planning?

• It provides a fixed income in retirement

• It offers tax-free withdrawals for qualified medical expenses

• It guarantees a return on investment

• It is only available to retirees