401(k), IRA, and Such- Saving for Retirement

What is the primary purpose of a 401(k)?

• Buying a house

• Saving for retirement

• Paying for college

• Starting a business

What is a 401(k)?

• A type of health insurance

• A workplace retirement plan that lets you make annual contributions up to a certain limit and invest that money for the benefit of your later years.

• A student loan program

• A type of mortgage

If you are over age 50, how much higher is the 401(k) contribution limit?

• $7,500 higher

• $2,000 higher

• $10,000 higher

• $5,000 higher

Employers may match employee contribution—up to a certain percentage—but do they have to match at all?

• Yes, always

• No, they do not have to match at all

• Only for full-time employees

• Only for part-time employees

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

• $23,000

• $23,500

• $24,000

• $22,500

What is the combined 401(k) contribution limit for employee and employer in 2025?

• $69,000

• $70,000

• $71,000

• $68,000

Fill in the blank: The increase in the employee 401(k) contribution limit from 2024 to 2025 is _____

• $23,500

• $23,000

• $500

• $1000

What is the main difference between a Traditional 401(k) and a Roth 401(k)?

• Traditional 401(k) is taxed when contributed, Roth 401(k) is taxed when withdrawn

• Traditional 401(k) is not taxed until withdrawn at retirement, Roth 401(k) is taxed when contributed

• Both are taxed at the same time

• Neither is taxed

If you take withdrawals from your 401(k) before age 59½, you will face a ___% penalty in addition to any taxes you owe.

• 10

• 5

• 15

• 20

Which type of 401(k) is taxed when you contribute, so no taxes are collected when withdrawn at retirement?

• Traditional 401(k)

• Roth 401(k)

• Both

• Neither