Personal Finance Test 4
A disadvantage of the annuity for life plan is that the payments stop when you die, so you can't pass the money on to your heirs. Select one: True False
False
As a young consumer you would be wise to be very cautious with your investing and avoid investing in stocks. Select one: True False
False
For a married couple with opposite spending habits, one checking account for the family is the ideal strategy. Select one: True False
False
For most people, there is really no reason to save for retirement since Social Security will provide retirement benefits until you die. Select one: True False
False
For someone wanting to minimize the taxes they are paying now, a Roth IRA would be preferable to a traditional IRA. Select one: True False
False
If you give $14,000 as a gift to someone who is not a blood relative, you will pay taxes on these funds and so will the recipient. Select one: True False
False
Living below your means leads to a harsh, barren lifestyle with little or no pleasure in life. Select one: True False
False
One of the best things about retirement is that retirees don't have to pay income taxes once they retire. Select one: True False
False
Opening a 529 plan for yourself near the end of your career is a good means to save for your retirement. Select one: True False
False
Robin was born after 1960, therefore, the retirement age for her to receive full Social Security benefits is 65. Select one: True False
False
Since the 2000s, the average personal savings rate in the U.S. has decreased. Select one: True False
False
The good thing about retirement is you no longer have to pay income taxes. Select one: True False
False
Today, there are roughly 18,000 publicly traded stock and bond funds, and for many workers, the prospect of choosing among them is paralyzing. Select one: True False
False
Your estate tax burden can be reduced by giving gifts to your heirs prior to your death. This has the effect of reducing the value of your estate and thus lowering your tax obligation. As of 2011, each spouse can give up to $________ each year to ________. Select one: a. 7,000; 2 people b. 8,000; 3 people c. 9,000; 4 people d. 10,000; 5 people e. 14,000; as many people as you like
e. 14,000; as many people as you like
A living will allows you to state your wishes regarding medical treatment in the event of an illness or injury that renders you unable to make decisions regarding your health care. Select one: True False
True
A person may have more than one qualified retirement plan open at the same time. Select one: True False
True
A will can be amended by a codicil for relatively minor changes. Select one: True False
True
A will is a legal document that describes how you want your property to be transferred to others. Select one: True False
True
The introductory statement of a will identifies whose will it is and revokes any prior wills. Select one: True False
True
The unified tax credit effectively nullifies the taxes on the first $5.34 million of one's estate. Select one: True False
True
There is no limit to the size of transfers that can be made between spouses on a tax-free basis. Select one: True False
True
Through joint tenancy in common, George was able to transfer his share of his assets in a company he owns with his best friend to his son instead of to his best friend. Select one: True False
True
To avoid paying income taxes on your lump-sum distribution, you could roll it over into a qualified IRA. Select one: True False
True
Two of the most important considerations when saving for retirement is the time you have to save and the return you earn on your savings. Select one: True False
True
Understanding key personal finance topics can prevent you from being a victim to fraud and self-interested behaviors of sales people and financial advisors. Select one: True False
True
Vanguard and Fidelity are two low-cost mutual fund families that offer Roth IRAs. Stick to them or another mutual fund family that features low costs and expenses. Select one: True False
True
When you get married it is a good time to evaluate your and your spouse's financial goals and come up with a set of joint financial goals. Select one: True False
True
With a lump-sum distribution of your retirement benefits, you must pay all of the income taxes on the entire amount up front. Select one: True False
True
Your decision on what type of annuity to purchase will have a dramatic impact on the monthly payments you will receive upon retirement. Select one: True False
True
As of 2014, the average monthly Social Security benefit for retired workers was Select one: a. $959. b. $1,150. c. $1,294. d. $1,677.
c. $1,294.
A joint and survivor annuity provides payments for both you and your spouse. Select one: True False
True
When you get married, by law you must have joint credit card accounts instead of individual accounts. Select one: True False
False
A Coverdell Education Savings Account works just like the Roth IRA for qualified education expenses, except with respect to contributions. Select one: True False
True
A durable health care power of attorney allows you to designate another person to make life support decisions if you are unable to. Select one: True False
True
According to the Employee Benefit Research Institute, one-third of U.S. households between the ages of 30 and 59 won't have enough money for retirement, even if they work until they're 70. Select one: True False
True
According to the Keown book, in 2014, the average interest rate on a credit card was around 15.6 percent-expensive borrowing, to be sure. Select one: True False
True
According to the author, 401(k) plans are actually do it yourself variation of a profit-sharing/thrift plan. Select one: True False
True
Because inflation makes goods and services cost more over time, one would be wise to always plan for inflation when planning one's retirement. Select one: True False
True
College graduates should be prepared to make many financial decisions during their first decade after graduation. Select one: True False
True
Consistently saving a little money for retirement when you are in your twenties is much better than saving a lot more money when you are in your fifties. Select one: True False
True
For low income senior households Social Security is a very important financial asset. Select one: True False
True
Gifts reduce the taxable value of your estate and allow you to help out your heirs while you're still alive. Select one: True False
True
Giving assets away as a gift reduces the value of your estate and allows you to help your heirs while you're still alive. Select one: True False
True
If all contributions to your IRA are tax deductible, then all withdrawals from your IRA will be taxed, unless you're just moving your money into another IRA. Select one: True False
True
In spite of the fact that many younger couples have high living expenses at first, it's is still vitally important to start a savings plan. Select one: True False
True
It is a good idea to start saving for retirement as early as possible to take advantage of compounding returns on your savings. Select one: True False
True
Living below your means deals with buying what you need versus buying what you want. Select one: True False
True
One of the drawbacks to defined-benefit plans are their lack of portability, meaning that if you leave the company the value of the pension is not likely to go with you. Select one: True False
True
One of the first steps in planning for your retirement is figuring out just what you want to do when you retire. Select one: True False
True
Social Security is a plan where current workers' contributions pay for current retiree's benefits. Select one: True False
True
The Federal Insurance Contributions Act isn't an investment, but rather a mandatory insurance plan that one pays into through salary deductions. Select one: True False
True
The correct equation to determine your estate's net worth is: value of your estate -level of estate's liabilities. Select one: True False
True
The executor is the individual who is responsible for carrying out the provisions of your will. Select one: True False
True
The federal estate tax exemption is $5.34 million per person. Recently, lawmakers ruled that the exempted amount held by the first to die would be transferable to the surviving spouse. Therefore, a married couple can now avoid federal estate taxes with combined assets of up to $10.68 million even without good estate planning. Select one: True False
True
The interest on your mortgage is generally tax deductible and this tax benefit should be considered when determining which type of debt you should use. Select one: True False
True
Valerie works as a free-lance artist. Her financial advisor suggested she establish a Keogh plan for her retirement. Is this an appropriate suggestion for her? Select one: a. Yes b. No
Yes
What does the generation skipping tax do? Select one: a. It imposed additional tax on gifts and bequests that are made from grandparent to grandchild. b. It allows grandparents to skip paying taxes on funds gifted to grandchildren. c. It encourages parents to skip leaving funds to their own children and to plan on leaving their estate to their grandchildren. d. All of these e. None of these
a. It imposed additional tax on gifts and bequests that are made from grandparent to grandchild.
You and your spouse both have good retirement plans through work and you both receive good Social Security checks based on your own incomes. If your goal is to maximize the size of your annuity check every month, which option should you choose? Select one: a. Single Life Annuity b. Annuity for Life or Certain Period c. Joint and Survivor Annuity d. All annuities have equal payment amounts, so it doesn't matter which you choose.
a. Single Life Annuity
You and your roommate have decided to purchase a house together. If you want your share of the asset to pass on to your relatives named in your will, what type of ownership should you establish for the house? Select one: a. Tenancy in common b. Community property c. Joint tenancy with the right of survivorship d. Tenancy by the entirety
a. Tenancy in common
The legal procedure that establishes the validity of a will, and then distributes the assets of the estate including the payment of any taxes, is called Select one: a. probate. b. verification. c. certification hearing. d. establishment hearing.
a. probate.
Alex works for a company with a 401(k) plan. He currently earns $80,000 in gross salary and contributes 8% of his gross salary into his 401(k) account. If his marginal tax rate is 33%, how much income tax liability is he saving by participating in his 401(k)? Select one: a. $6,400 b. $2,112 c. $6,000 d. $16,800
b. $2,112
You have determined that you will need to accumulate $1,000,000 in your retirement account in order to cover your inflation-adjusted shortfall. Which of the following is closest to the amount of money you would need to put into a tax-deferred retirement account every year if you plan on retiring in 40 years? Assume an 8% average return on this account, and that it is empty today. Select one: a. $1,458 b. $3,860 c. $5,957 d. $8,444
b. $3,860
You have determined that you will need to accumulate $1,000,000 in your retirement account in order to cover your inflation-adjusted shortfall. Which of the following is closest to the amount of money you would need to put into a tax-deferred retirement account every year if you plan on retiring in 40 years? Assume an 8% average return on this account, and that it is empty today. Select one: a. $1,458 b. $3,860 c. $5,957 d. $8,444
b. $3,860
Suppose that you have estimated that, to provide for your retirement income, you will need $2,250,000 on deposit in your retirement account when you retire. You believe that you will earn an average of 11% on your retirement investments until you retire in 35 years. What must your annual deposits be to accumulate this total? Select one: a. $21,991.14 b. $6,586.85 c. $5,904.84 d. $6,878.77 e. None of these
b. $6,586.85
________ of workers feel confident they will have enough money to live comfortably in retirement, only ________ have actually tried to calculate how much they will need when in retirement. Select one: a. 50 percent; 33 percent b. 70 percent; 43 percent c. 85 percent; 53 percent d. 90 percent; 73 percent
b. 70 percent; 43 percent
Today, there are roughly ________ publicly traded stock and bond funds, and for many workers, the prospect of choosing among them is paralyzing. Select one: a. 5,000 b. 8,000 c. 18,000 d. 23,000
b. 8,000
John Kennedy Jr. and his wife Caroline both perished in the same plane crash. Which of the following clauses would identify who is assumed to have perished first? Select one: a. Appointment clause b. Common disaster clause c. Attestation clause d. Witness clause e. Bimodal death clause
b. Common disaster
Which feature makes it possible for a married couple to transfer up to $10.68 million and avoid federal estate tax, all without having to use a family trust? Select one: a. Propaganda b. Portability c. Sustainability d. Revocable
b. Portability
A trust that gives the individual establishing the trust the ability to direct income from the trust to his or her spouse over the spouse's life, and then, at the spouse's death, to choose to whom the assets go is called a Select one: a. sprinkling trust. b. Q-TIP. c. A-B trust. d. credit-shelter trust. e. unified credit trust.
b. Q-TIP.
The process of determining what your heirs will receive from your estate occurs in which step of the estate planning process? Select one: a. Step 1 b. Step 2 c. Step 3 d. Step 4 e. Step 5
b. Step 2
________ is a type of ownership that exists only between married couples. Select one: a. Survivorship tenancy b. Tenancy by the entirety c. Common tenancy d. Marriage tenancy e. Conjugal tenancy
b. Tenancy by the entirety
You know that the advantages of having a will likely outweigh the disadvantages associated with probate. Which is not a disadvantage of probate? Select one: a. Legal fees and court costs must be paid. b. The will is validated. c. There are typically executor fees for settling the estate (unless the executor is a family member who chooses only to be reimbursed for expenses). d. Costs of probate can equal 1 to 8 percent of the value of the estate. e. The process may be slow, particularly if someone challenges the will.
b. The will is validated.
Many older companies have changed from a defined-benefit plan to a(n) ________, which is a retirement plan where workers are credited with a percentage of their pay each year, plus a predetermined rate of interest. Select one: a. funded pension plan b. cash balance plan c. unfunded pension plan d. percentage plus inflation plan e. None of these
b. cash balance plan
An attachment to a will that alters or amends a portion of the will is called a Select one: a. proxy. b. codicil. c. letter of last instructions. d. revocation. e. None of these.
b. codicil.
In some states, property that is acquired during a marriage is referred to as ________ and upon the death of either spouse, his/her half is distributed according to the will, or if intestate, according to state law. Select one: a. ownership property b. community property c. marriage assets d. common assets e. None of these
b. community property
The purpose of a ________ trust is to reduce estate tax liability when one spouse predeceases the other. Select one: a. sprinkling b. family c. Q-TIP d. revocable
b. family
You were almost killed in a recent mountain bike accident and have decided to write a will. You also plan to construct a(n) ________, which will give information and directions with respect to the execution of your will. Select one: a. codicil b. letter of last instructions c. living trust d. appointment clause e. attestation and witness clause
b. letter of last instructions
Relative to insurance, when a payout arrangement is made in which one receives all benefits in a single payment, this is called a Select one: a. cash payout. b. lump-sum option. c. single distribution plan. d. point plan. e. None of these.
b. lump-sum option
Only about ________ Americans have created a trust as part of an estate plan. Select one: a. one out of three b. one out of five c. five out of 10 d. eight out of 10
b. one out of five
Jose does not have a retirement plan at work. He currently earns $30,000 in salary and is in the 15% marginal tax bracket. If he contributes the maximum contribution of $5,500 to his traditional IRA, how much money will he save on his income tax liability? Select one: a. He won't save any money, since only the Roth IRA has tax deductions on contributions. b. He won't save any money, since his income does not qualify for tax deductions for a qualified plan. c. $825 d. $5000
c. $825
A(n) ________ retirement plan is one in which the company will contribute shares of company stock into the employee's account in place of a cash contribution. The employee does well if the company stock appreciates in value, but can suffer dramatically if the stock depreciates in value. Select one: a. 401(k) stock account b. 403(b) stock account c. ESOP d. stock repurchase plan
c. ESOP
Lucius starts saving $100 per month at age 25 and averages 6% per year compounded monthly. Hector starts saving $1,215.22 per month at age 55 and averages 6% per year compounded monthly. Who will be better off at age 65 assuming neither had in money in their account when they started? Select one: a. Lucius will have $15,476.20 and Hector will have $16,017.57 at age 65. b. Lucius will have $199,149.07 and Hector will have $163,879.34 at age 65. c. They both will have the same amount of money in their accounts at age 65. d. Not enough information available.
c. They both will have the same amount of money in their accounts at age 65.
Why have many companies switched from traditional defined-benefits plans to cash-balance plans? Select one: a. They want to shower their employees with money b. Regulatory reform made it necessary. c. They save money with them as a result of reduced future benefits for older workers. d. All of these are correct. e. Only Regulatory reform made it necessary and They save money with them as a result of reduced future benefits for older workers are correct.
c. They save money with them as a result of reduced future benefits for older workers.
If you have a defined-benefit retirement plan through your place of employment, you are considered a(n) ________; and as such, there is an income limit after which your IRA contributions are no longer tax deductible. Select one: a. restricted participant b. deactivated participant c. active participant d. All of these are correct. e. Only restricted participant and active participant are correct.
c. active participant
An individual who is responsible for carrying out the provisions of your will and managing your property until the estate is passed on to your heirs is called the Select one: a. attorney. b. lease. c. executor. d. receptor. e. None of these.
c. executor.
When planning the retirement payout, there are several options from which to choose. With the ________ option the annuity provides payments over the life of both you and your spouse. Select one: a. single life annuity b. lump sum annuity c. joint and survivor annuity d. annuity for life e. combination annuity
c. joint and survivor annuity
Tran is employed at a company that annually contributes anywhere from 2% up to 12% of his salary into his retirement plan, depending on how good the company's financials were that year. This type of contribution plan is a(n) ________ plan. Select one: a. 401(k) b. ESOP c. profit-sharing d. performance
c. profit-sharing
Frank is considering a new job. However he is concerned about his pension fund. He knows that ________ which is the requirement that he must work for his firm for a specified period of time prior to gaining ownership of the retirement contributions made by his employer has to be met first. Select one: a. tenuring b. certifying c. vesting d. validating e. None of these
c. vesting
According to U.S. News and World Reports, the required investment for a medium income family to raise and support a child for 22 years is approximately Select one: a. $52,000 b. $197,704 c. $1,000,000 d. $1,450,000 e. $3,000,000
d. $1,450,000
You and your spouse wish to give each of your three grandchildren a yearly tax-free gift from your estate. If you give each of your three grandchildren the maximum amount allowed by law, what is the total amount that you as a couple would pay out in gifts in 2014? Select one: a. $14,000 per year b. $42,000 per year c. $54,000 per year d. $84,000 per year
d. $84,000 per year
To be eligible for Social Security benefits, you receive one credit for every $1,200 in wages that you earn, up to 4 credits per year. How many total credits do you need to qualify for benefits? Select one: a. 4 b. 20 c. 30 d. 40
d. 40
How is the size of a person's Social Security retirement benefits determined? Select one: a. It depends on the number of credits earned in a person's lifetime. b. It depends on the average level of earning over a person's lifetime. c. It depends on the number of years a person has paid Social Security taxes. d. All of these are correct. e. Only It depends on the average level of earning over a person's lifetime and It depends on the number of years a person has paid Social Security taxes are correct.
d. All of these are correct.
Richard Harris wants to elect the single life annuity option for retirement. His mother lived to age 92 and his dad lived to be 89. This annuity will pay Richard a set monthly payment for as long as he lives. What possible disadvantage might he face? Select one: a. There will be no inflation protection. b. There will be no flexibility for withdrawals in case of emergencies. c. The balance of the money left over upon death will not be passed on to his heirs. d. All of these are correct. e. Only There will be no inflation protection and The balance of the money left over upon death will not be passed on to his heirs are correct.
d. All of these are correct.
What is the importance of understanding the financial life cycle? Select one: a. It allows you to be proactive in financial planning to prepare for your changing needs. b. It allows you to take advantage of the time-value-of-money. c. It helps you in achieving your long-term financial goals. d. All of these are correct. e. Only It allows you to be proactive in financial planning to prepare for your changing needs and It helps you in achieving your long-term financial goals are correct.
d. All of these are correct.
When is rolling your lump-sum retirement benefits into an IRA a good financial decision? Select one: a. If you have taken a new job b. If you have retired early c. If you don't need the funds immediately d. All of these are correct. e. Only if you have taken a new job and If you don't need the funds immediately are correct.
d. All of these are correct.
The unlimited gift tax exclusion for medical or education expenses can only be gifted to which of the following? Select one: a. Blood relatives b. Siblings c. Your biological children d. Anyone regardless to how they are related to you e. None of these
d. Anyone regardless to how they are related to you
You and your brother have decided to invest in the stock market together. You will put in $5,000 each and open a single account at a brokerage. How should the ownership of this account be established if both of you wish the other to keep all the money in the event that the other should die? Select one: a. Tenancy by the entirety b. Joint tenancy with the right of survivorship c. Tenancy in common d. Community property
d. Community property
What is the name for a document that provides for someone to act in your place for legal and financial matters in the event that you become mentally incapacitated? Select one: a. Specific power of attorney b. Revocable power of attorney c. Incapacitated power of attorney d. Durable power of attorney e. None of these
d. Durable power of attorney
Which of the following is a disadvantage of joint ownership? Select one: a. Jointly owned assets avoid probate. b. It makes it legal for one party to "take the money and run." c. It discourages compromise in the case of a divorce. d. None of these is a disadvantage of joint ownership.
d. None of these is a disadvantage of joint ownership.
Which of the following statistics concerning women are not true? Select one: a. About 75% of the elderly people living in poverty are women. b. Eighty percent of all widows who are now living in poverty were not living in poverty while their husbands were still alive. c. Almost half of all single elderly women get most of their income from Social Security. d. Only 22% of women 65 and older received pension benefits, versus 29% of men, and the median amount of the women's pension income was over twice that of men.
d. Only 22% of women 65 and older received pension benefits, versus 29% of men, and the median amount of the women's pension income was over twice that of men.
Like many Americans you know that you must plan your retirement funds carefully because there may be a discrepancy between the funds that you will need to survive on during retirement and the income that you will have available during retirement. What will likely be the relationship between fund needs and income available during retirement for MOST Americans? Select one: a. They will match. b. They will be close. c. They will not be close -income will be greater than needs. d. They will not be close -needs will be greater than income.
d. They will not be close -needs will be greater than income.
Which of the following statements about saving for college is not true? Select one: a. The Coverdell Education Savings Account works just like the Roth IRA, except with respect to contributions. b. If the money in a Coverdell Education Savings Account isn't used for college, taxes and penalties may apply. c. Some 529 plans are prepaid college tuition plans. d. You must open a 529 plan sponsored by the state in which you reside. e. 529 college savings plans offer more flexibility than prepaid college tuition plans.
d. You must open a 529 plan sponsored by the state in which you reside.
Someone who receives assets or money from a person after death is called the deceased's Select one: a. receptor. b. receptee. c. obtainee. d. beneficiary. e. None of these.
d. beneficiary
Defined-benefit pension plans are generally ________ and they lack ________. Select one: a. contributory; divesting b. noncontributory; divesting c. contributory; portability d. noncontributory; portability e. vested; portability
d. noncontributory; portability
If your pension fund contained a provision that allowed employees who were leaving the company to retain and transfer any pension benefits earned to another pension plan, it would be said to have Select one: a. transference. b. releasability. c. transportance. d. portability. e. None of these.
d. portability.
Herbert's will is missing the section revoking any earlier wills. A young lawyer prepared the will and made this oversight. What dangers are present because of this omission? Select one: a. There may be a prior conflicting will. b. Multiple wills make a mess out of the probate process. c. The probate process will slow down tremendously. d. It could be many years before the heirs receive their inheritance. e. All of these
e. All of these
Madonna is a famous singer; as such, she may select to settle her estate through a trust because of which reason(s)? Select one: a. Trusts are harder to challenge. b. Trusts reduce estate taxes. c. Trusts provide confidentiality. d. Trusts allow for professional management. e. All of these
e. All of these
Retirement income comes from which of the following sources? Select one: a. Social Security b. Pensions c. Asset income d. Earnings e. All of these
e. All of these
What methods exist to avoid probate, or to establish non-probate property? Select one: a. Gifts b. Trusts c. Contracts like life insurance and retirement plans d. Joint ownership e. All of these
e. All of these
Which of the following is/are a typical cash need(s) of one's estate? Select one: a. Funeral expenses b. Legal fees c. Outstanding debt d. Estate and inheritance taxes e. All of these
e. All of these
Which of the following statements is true regarding Social Security retirement benefits? Select one: a. It attempts to replace 42% of your average earnings. b. Not all occupations are covered. c. Some people's benefits may be taxed. d. You may retire beginning at age 62 with reduced benefits. e. All of these
e. All of these
Why might one want to select the lump-sum payment option for one's retirement funds? Select one: a. Taking the lump-sum can be a hedge against inflation. b. The lump-sum option provides greater flexibility than other options. c. You can invest the funds and perhaps earn a higher return. d. Having access to the funds provides money for emergencies. e. All of these
e. All of these
What is/are advantage(s) to establishing a trust? Select one: a. Trusts bypass probate. b. Trusts can ensure that children from a previous marriage will receive some inheritance. c. Trusts can be used to shelter assets from estate taxes. d. A trust does not become a matter of public record, so it offers confidentiality. e. All of these are advantages to using a trust.
e. All of these are advantages to using a trust.
All of the following are commonly used estate planning tools except Select one: a. a will. b. durable power of attorney and joint ownership of assets. c. life insurance. d. gifts and trusts. e. All of these are commonly used estate planning tools.
e. All of these are commonly used estate planning tools.
In which kind of trust can you place your assets while still alive? Select one: a. A revocable living trust b. Sprinkling trust c. An irrevocable living trust d. None of these e. Both A revocable living trust and An irrevocable living trust
e. Both A revocable living trust and An irrevocable living trust
Why is it more difficult for women to plan for their retirement than it is for men? Select one: a. On average, men die younger than women. b. Women generally earn less income and pay less into Social Security than men do. c. Women rely on defined-benefit plans more than men do. d. All of these are correct. e. Only On average, men die younger than women and Women generally earn less income and pay less into Social Security than men do are correct.
e. Only On average, men die younger than women and Women generally earn less income and pay less into Social Security than men do are correct.
Social Security is a system where current workers' pay taxes that are used to pay current retirees' benefits. How is Social Security funded? Select one: a. Income taxes by all Americans b. Payroll taxes on employees up to a salary cap c. Payroll taxes on employers up to a salary cap d. All of these are correct. e. Only Payroll taxes on employees up to a salary cap and Payroll taxes on employers up to a salary cap are correct.
e. Only Payroll taxes on employees up to a salary cap and Payroll taxes on employers up to a salary cap are correct.
Debt is being marketed to adults as much as toys are to children. What are some of the results of this? Select one: a. People are encouraged to borrow more than they should. b. Almost 60% of those aged 30 and under do not pay off their credit card bills every month. c. Students are limited in their capacity to obtain debt. d. All of these e. Only People are encouraged to borrow more than they should and Almost 60% of those aged 30 and under do not pay off their credit card bills every month
e. Only People are encouraged to borrow more than they should and Almost 60% of those aged 30 and under do not pay off their credit card bills every month
Congratulations! You have just retired with $1.4 million dollars in your 401(k) plan. You will be receiving a fairly large Social Security check and you have adequate personal savings outside of your 401(k) to live on for several years. You don't want to lock up your retirement money into an annuity because you want to be flexible for the future. What would be your best option? Select one: a. Purchase an early withdrawal annuity. b. Roll over the balance into a qualified IRA account. c. Hire a Certified Financial Planner for investing advice. d. All of these are correct. e. Only Roll over the balance into a qualified IRA account and Hire a Certified Financial Planner for investing advice are correct.
e. Only Roll over the balance into a qualified IRA account and Hire a Certified Financial Planner for investing advice are correct.
Which of the following retirement plans is designed for small businesses? Select one: a. SIMPLE plans b. SEP-IRA plans c. ESOP d. All of these e. Only SIMPLE plans and SEP-IRA plans
e. Only SIMPLE plans and SEP-IRA plans
The U.S. tax code allows ________ to transfer the entire estate to the survivor tax-free, assuming the recipient is a U.S. citizen. Select one: a. a generation-skipping clause b. gift taxes c. a common disaster clause d. tenancy in common e. an unlimited marital deduction
e. an unlimited marital deduction
Alfred has appointed an executor in his will. This person will be responsible for Select one: a. carrying out Alfred's wishes. b. acting under the durable power of attorney. c. managing Alfred's property until the estate is passed on to the heirs. d. acting under the durable health care power of attorney. e. both carrying out Alfred's wishes and managing Alfred's property until the estate is passed on to the heirs.
e. both carrying out Alfred's wishes and managing Alfred's property until the estate is passed on to the heirs.
Herbert Dix picked up a booklet at his attorney's office that described estate planning. All of the following were included as primary objectives of estate planning except Select one: a. distribute property according to your wishes and provide for your dependents. b. develop a plan that will minimize estate and inheritance taxes. c. develop a plan that minimizes settlement costs, including legal and accounting fees. d. utilize a living will to describe your choices in a terminal situation and a health care proxy to identify those to whom you relinquish health care decision-making authority in the event of physical or mental impairment. e. estate planning involves all of these objectives.
e. estate planning involves all of these objectives.
Once May Lou starts receiving her $1,200 monthly annuity payments she will pay income tax as if the annuity were Select one: a. tax-deferred. b. tax-sheltered. c. tax-exempt. d. tax-free income. e. normal income
e. normal income
A durable power of attorney means that the attorney who wrote the will for you is your legal guardian in case you become incapacitated and can't make decisions yourself. Select one: True False
false
If you have children from a previous marriage and you get remarried and own property jointly with your new spouse, then tenancy by the entirety should be sufficient for you if you wish your children to inherit your property. Select one: True False
false
In most states, community property is recognized and trumps any allocations in your will. Select one: True False
false
The law allows you to give $25,000 per year tax free in 2015 to as many people as you'd like. Select one: True False
false