Personal Finance Final

The maximum gift that can be given to another person without incurring gift taxes is

$14,000

A salary-reduction plan is also known as a

401(k) plan

An employer may choose to match the contribution made by employees in a

401(k) plan or a salary-reduction plan

Employees who were born in 1960 or later can receive full Social Security benefits beginning at age

67

What percentage of American workers are covered by Social Security?

97%

The best definition of estate planning in

A definite plan for managing property during one's lifetime and at one's death

A codicil is

A document that explains, adds or deletes provisions in an existing will

The letter of last instruction is

A non-legally binding document that provides information regarding your death such as funeral arrangements.

When conducting a financial analysis for retirement planning, you should review

All of these - housing, life insurance, other investments, assets.

Which of the following is not a major source of retirement income?

All of these are major sources of retirement income - annuity, employer pension plan, personal pension plan, and public pension plan.

If you have fully funded your 401(k) and profit sharing plans up to the allowable limits then you may want to put away more money for retirement is a(n)

Annuity

Estate planning is an essential part of

Both retirement planning and financial planning

When you retire, you will probably spend less money on

Clothing

What steps should be taken in retirement planning?

Conduct a financial analysis and estimate retirement living expenses.

Social Security

Covers 97% of al American workers

Gladys wants to set up a trust that is also known as bypass trust, family trust "residuary" trust, A/B trust, trust. She should set up a(n)

Credit-shelter trust

This trust is designed to allow married couples to take full advantage of the federal estate tax exemption

Credit-shelter trust

how is eligibility determined for receiving Social Security retirement benefits?

Credits

All of the following are examples of defined contribution plans except

Defined-benefit plan

Another name for a Coverdell account is a(n)

Education IRA

in 1974 ERISA was passed. What does ERISA stand for?

Employee Retirement Income Security Act

Vesting is the right to receive the

Employer's contributions to a pension plan even if the employee leaves the company before retiring.

An estate consists of

Everything you own

A will that is usually prepared with the help of an attorney is known as a(n)

Formal will

A(n) us the creator of a trust

Grantor

When you retire, you will probably spend more money on

Health Insurance

A handwritten will is known as a(n)

Holographic will

This allows for the trustor to receive benefits during his or her lifetime

Inter vivos trust

When conducting a financial analysis for retirement planning

Investments should be evaluated to determine whether their income can help cover living expenses.

This is the best option if you or your beneficiaries are inexperienced in financial matters and if your estate taxes will be high.

Testamentary trust

This trust is established by your will and becomes effective upon your death

Testamentary trust

When thinking about retirement, which of the following is correct?

The sooner you start saving, the better.

A legal arrangement that helps manage the assets of your estate for your benefit or that of your beneficiaries is called a

Trust

A(n) _________ administers a trust

Trustee

When estimating your budget or spending plan at retirement, you should consider all of the following except

Withdrawing all retirement savings within five years of retirement

Intestate is

dying without a valid will

This tax is only imposed by state governments

inheritance tax

When an employer promises to set aside a certain amount of money for each employee each year, it has set as a

money-purchase plan

A(n) ___________ allows you to end the trust or change its terms during your lifetime

revocable trust

Your will must be signed by

you in front of two witnesses

When you die, this tax will be based on the fair market value of your investments, property and bank accounts less an exemption of $5.34 million in 2014

Estate tax

Candice is updating her estate planning and wants to write a legal document that will allow all of her assets to go to her spouse except for a certain amount that will be set up in a trust. The trust (plus interest) can provide her spouse lifelong income hat will not be taxed. She is writing a(n)

Exemption trust will

Willian is updating his estate planning and wants to draft a legal document that leaves all of his assets to his wife except a certain amount which goes into a trust

Exemption trust will

Trusts and estates must pay quarterly estimated taxes based on taxable income for

Federal income tax purposes

Which of the following will probably be your most valuable asset at retirement?

House

An "average" older (65+) household spends most of its money on

Housing

An "average" older (65+) household spends more money on

Housing than on cash contributions, entertainment and clothing combined.

A(n)_______ cannot be changed or ended

Irrevocable trust

Another name of an H.R. 10 plan or self-employed retirement plan is a

Keogh plan

This is also known as a inter vivos trust

Living trust

Multiple copie sof a _____________ should be distributed to those closest to you as well as your family doctor

Living will

An employer's contribution will vary according to the company's profits in a

Profit-sharing plan

Jill is 45 years old and things that her future tax rate will be lower than what she currently pays, so she wants to defer her taxes on her contributions of up to $5,50 in 2014. Which plan would allow her to meet her goals.

Regular IRA

Julian's annual contributions to his retirement are not tax-deductible, but his earnings accumulate tax-free. He is investing in a

Roth IRA

Lawrence is self-employed and wants to establish the simplest type of retirement plan. He should set up a

SEP Plan

When planning for retirement, inflation

Should be considered since income received earlier in retirement will buy more than the same amount received due to the rising prices of goods and services

Jacob is updating his estate planning and wants to draft a legal document that leaves everything to his spouse. He is writing a(n)

Simple will

Which of the following is not an important document associated with estate planning?

Spending plan or budget

Robert's wife Fiona does not work, and they file a joint tax return. Robert can contribute on behalf of Fiona into a

Spousal IRA

Darlene is updating her estate planning and wants to set up a legal document that leaves $5.43 million to her husband. She is writing a(n)

State amount will

A will prepared on a preprinted form from a stationery store is called a(n)

Staturtory will

When an employer's contribution is used to buy stock int he company for its employees, it has a

Stock bonus plan

Sean's estate planning should

Take the needs of his wife and children into account

If you have children and are writing your will, you need to do all of the following except

Write the will with the help of an attorney

Which retirement plan specifies the benefits you'll receive at retirement age based on your total earning and

defined-benefit plan

Jason is updating his estate planning and wants to set up a legal document that leaves half of the adjusted gross estate to his wife. He is writing a(n)

traditional martial share will.