WorksheetsRMI 330 Exam 2
Total questions: 25
Worksheet time: 14mins
Using the bottom-up approach, calculate Carlos’s WRR: Salary = $85,000 Current expenses = $75,000 Expected retirement expenses = $60,000
70.6%
80%
88.2%
91.2%
Who bears the investment risk in a defined benefit pension plan?
Employer
Employee
IRS
SEC
Which of the following is considered a qualified retirement plan under ERISA?
401(k)
Non-qualified deferred compensation plan
Roth IRA
Traditional IRA
A defined benefit plan pays $80 per month for each year of service. If an employee works 25 years, what is the annual pension benefit?
$20,000
$22,500
$24,000
$26,500
Which statement best reflects the idea of “retirement readiness”?
Being completely debt-free
Having enough financial resources to maintain your desired lifestyle without working
Reaching full Social Security retirement age
Saving at least 15% of salary each year
Retirement Life Expectancy (RLE) refers to:
Years between beginning work and retirement
Years between retirement and expected death
Years of full-time employment
Years invested in a 401(k) or IRA
Starting in 2025, what new requirement applies to newly established 401(k) plans?
They must automatically enroll employees
They must be funded only by employers
They must allow after-tax contributions
They must offer a defined benefit formula
Which retirement plan provision ensures a spouse receives benefits if the participant dies before retirement payments start?
Qualified Joint & Survivor Annuity (QJSA)
Qualified Preretirement Survivor Annuity (QPSA)
PBGC guarantee
Automatic enrollment
Which FIRE strategy allows someone to quit their full-time job but still work part-time for benefits?
Coast FIRE
Lean FIRE
Barista FIRE
Fat FIRE
In 2026, what is the additional catch-up contribution allowed for workers age 50 and older in a 401(k)?
$5,000
$8,000
$10,000
$15,000
What does the term “Work-Life Expectancy (WLE)” measure?
Years spent in retirement after leaving the workforce
Years a person is expected to participate in the labor force
The typical retirement age in the U.S.
The average life span of an employee
The general minimum eligibility requirements for an employer’s qualified retirement plan are:
Age 18 and 6 months of service
Age 21 and 1 year of service
Age 25 and 2 years of service
Age 26 and 2 years of service
Which of the following factors increases the amount someone must save for retirement?
Longer work life
Higher investment returns
Lower expected retirement expenses
Longer retirement horizon
Which government agency insures defined benefit pension payments?
FDIC
PBGC
SEC
DOL
Under a 3–7 year graded vesting schedule, how vested is an employee after 6 years of service?
60%
80%
100%
40%
A pension formula pays 1.8% × Years of Service × Final Salary. If Jordan retires with a final salary of $90,000 and 20 years of service, what is his annual benefit?
$28,800
$30,600
$32,400
$34,200
On average, how much do employee benefit costs (including retirement plans, health insurance, etc.) add to an employer’s payroll expenses?
10-20%
30–40%
50–60%
80–100%
Using the top-down approach, calculate Mia’s wage replacement ratio (WRR): Salary = $100,000 Payroll tax = 7.65% Savings toward retirement = 12%
80%
82%
84%
86%
In a defined contribution plan, who is responsible for the investment risk?
Employer
Employee
PBGC
Federal Government
What is the 2026 elective deferral limit for employees contributing to a 401(k) plan (before catch-up)?
$23,500
$23,000
$24,500
$25,000
Which of the following best defines financial independence?
The ability to retire before age 60
The ability to live comfortably without working for income
Receiving Social Security and Medicare benefits
Having an employer-sponsored retirement plan
Which trend has been observed in retirement plans since the 1980s?
Defined benefit plans have increased
Defined contribution plans have decreased
Defined contribution plans have increased
Government plans have replaced employer plans
Emily, age 35, earns $120,000 at her company. Her employer’s 401(k) plan matches 100% of the first 4% of salary contributed. If Emily contributes $23,500 in 2026, what is the total annual contribution to her 401(k) account (employee + employer)?
$23,500
$28,300
$28,800
$33,500
Why is it most important to start retirement planning early?
To reduce the burden of taxes
To take advantage of compound interest
To avoid working at all
Because it's a legal requirement
