Chapter 15

A plan available through companies that operate for a profit; taxes are deferred until the money contribute is withdrawn

401K

A plan for employees of government or not-for-profit organizations; taxes are deferred until the money contributed is withdrawn

403B

What is an individual plan or contract written by an insurance company to provide regular income at a later stage in life?

Annuity

Used to make small changes to an existing will

Codicil

Allows the tax-free buildup of interest or dividends during the contract time

Deferred annuity

The contract specifies the benefits promised to the employee at normal retirement age

Defined-benefit plan

A minimum contribution is made by both employer and employee; no particular benefit is promised

Defined-contribution plan

When a person is living, all he or she owns, less debts owed

Estate

The process of planning for the administration and transfer of property during one's lifetime and at one's death

Estate planning

Levied by the federal government on the transfer of property at death

Estate tax

A Roth IRA offers full tax-free benefits; no tax is levied on money used for a Roth IRA

False

Gift taxes are levied against the person receiving the gift, not against the estate

False

Inheritance taxes are levied against the estate of the decedent by the federal government

False

Insurance needs do not change with retirement

False

Social security benefits are usually sufficient to provide a comfortable retirement

False

People entitled to receive the property or assets from another person who has died

Heirs

A will that is handwritten

Holographic will

A tax-sheltered retirement plan to which working people make annual contributions of u to $5500 per year

Individual retirement account

What are taxes levied by states against heirs who receive all or part o an estate?

Inheritance taxes

A person who dies without having a valid will is said to die

Intestate

Self-employed individuals and their employees may contribute to

Keogh plan

A legal document that authorizes another person to act on your behalf in your absence

Power of attorney

A court process when a will validated and processed

Probate

Provides a homeowner with tax-free income in the form of a loan to be paid back when the property is sold

Reverse mortgage

What is a retirement plan for small businesses?

SEP

What is a trust that takes effect when a person dies

Testamentary

The person who makes or draws a will

Testator

A person can change his or her will at a later time, using a codicil or writing a new will

True

An estate must be worth more than a certain amount to be subject to federal estate taxes

True

Inflation is a major concern to people on fixed retirement income

True

With a reverse mortgage, you can receive payments equal to your equity

True

A certain number of years or other condition of employment has passed makes an employee

Vested

A legal document that tells you how you want your estate to b divided in the end

Will