Dave Ramsey Chapter 11

The company Jason works for matches his 401(k) contribution up to 5%. Jason takes advantage of this by maximizing his contribution amount to $200 per month. At the end of one year, how much money will be in his account?

$2,520

Typical retirement plan found in most companies is called?

401(k)

Retirement plan found in non-profit groups (schools, hospitals) is called?

403(b)

A deferred compensation plan is called? (#'s)

457

Using the Rule of 72, how long it will take your money to double at 12% interest?

6 years

When seeking a financial counselor to help you with your investments, always go with what type of counselor? (characteristics)

A financial counselor with the heart of a teacher who explains everything to you

Invest 15% of income for retirement is which baby step?

Baby Step 4

College Funding is which baby step

Baby Step 5

Under what condition are you not able to make a tax-free withdrawal from your Roth IRA?

Career change and temporary drop of income

The manager of a child's UTMA account until he or she reaches age 21 is called a _____

Custodian

What is the best option for your retirement plan when you leave a company?

Do a direct transfer into an IRA

Which of the following is a good way to save for college?

ESA

Save for college by first using this type of account

Educational Savings Account

"457" plans are designed for employees of non-profit organizations such as hospitals and schools. t/f

False

If you borrow from your investments, you will likely pay taxes and penalties, but you will not unplug the investment, meaning it will not cease to compound. t/f

False

Once you have a fully funded emergency fund, put 10% of your income into retirement plans. t/f

False

Pre-tax means the government allows you to invest money after taxes are taken out. t/f

False

You should begin investing in retirement funds before your emergency fund is in place. t/f

False

Old fashioned retirement plan that is nearly no longer offered to employees is called?

Pension

Movement of tax-deferred retirement money from one plan to another is called?

Rollover

A retirement plan for self-employed people is called (acronym)

SEPP

What are 4 reasons depending on Social Security as your retirement plan is a bad idea?

Social Security does not provide a large sum of money each month There is a maximum amount you are allowed to collect In most cases, the amount given will not support your standard of living There is a lot of speculation about whether or not Social Security will even exist in the near future

The primary difference between the Roth IRA and a traditional IRA is:

The Roth IRA grows tax free; the traditional IRA does not

Definition of IRA

The tax treatment on virtually any type of investment

An IRA is the tax treatment on virtually any type of investment and it protects, or shelters, your money from taxes. t/f

True

ESA's are a good way to save for college. t/f

True

If we used a race analogy to describe building wealth, it would be most like a marathon. t/f

True

You should wait until after your emergency fund is in place before you invest in retirement funds. t/f

True

What does Baby Step 5 say about saving for your children's college?

Use tax-favored plans

If you have $3,000 invested in a Roth IRA, what is true about your contribution? (in relation to taxes)

You have already paid taxes on the money, so it will grow tax free.

You should never save for college using insurance, savings bonds or pre-paid college tuition. t/f

true