WorksheetsUnderstanding 401(k) Plans
Total questions: 9
Worksheet time: 5mins
What is a 401(k)?
A bank account for daily expenses
A loan you take from your employer
A retirement savings account that lets you invest money from your paycheck
A type of savings account for buying a car
Why is it important to contribute to a 401(k)?
Because it helps you save for retirement with potential employer matching
Because it helps you buy a house
Because it lets you avoid paying any taxes
Because it allows you to travel more
What is a company match in a 401(k)?
When your company gives you a bonus
When your company matches the amount you contribute to your 401(k)
When your company gives you a gift card
When your company pays for your vacation
What is the difference between a Traditional and a Roth 401(k)?
Traditional 401(k) is for young people, Roth is for older people
Traditional 401(k) contributions are taxed now, Roth contributions are taxed later
Traditional 401(k) contributions are taxed later, Roth contributions are taxed now
There is no difference between them
What should you do if you leave your job?
Spend it on a vacation
Roll it into your new employer’s 401(k) or an IRA
Leave your 401(k) with your old employer forever
Cash out your 401(k) immediately
What is a Target-Date Fund?
A fund that guarantees high returns
A fund that only invests in technology companies
A fund that adjusts risk based on your retirement year
A fund that targets specific stocks
What happens if you don't pick an investment option for your 401(k)?
Your money will be automatically invested in the best option
Your money will just sit there and not grow
You will lose all your money
Your employer will choose for you
What is the best strategy if money is tight but you want to contribute to a 401(k)?
Wait until you are older to start contributing
Contribute nothing until you have more money
Only contribute if you get a raise
Start with 1-2% and increase it over time
Retirement planning should ideally begin...
a few years before retirement
when all debts are paid off
when kids go off to college
when the first paycheck is received
