MM Chapter 3

1.

1 point

If you borrow against your retirement plan, under which conditions must you pay it back?

You choose to leave the company

You are forced to leave the company

You die

All of the above

2.

1 point

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

Forget about it, it is gone.

Do a direct transfer into an IRA.

Start a new one.

Cash out the plan and invest in good mutual funds.

3.

1 point

ESAs are a good way to save for college.

True

False

4.

1 point

Typical retirement plan found in most companies is called

Roth IRA

403b

401k

SEPP

5.

1 point

Which of the following are good ideas to save for college?

Savings Bonds

Life Insurance

Pre-Paid Tuition

ESA

6.

1 point

You should save for college using savings bonds.

True

False

7.

1 point

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

mistake

wire

pension

rollover

8.

1 point

If your money is in a pre-tax retirement plan, you will pay taxes on it when you cash it out.

True

False

9.

1 point

Pension plans only work if you participate in them. If you put nothing in, you will get nothing out.

True

False

10.

1 point

Never roll over your 401(k) when you leave a company.

True

False

11.

1 point

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

Baby Step 8

Baby Step 1

Baby Step 6

Baby Step 4

12.

1 point

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

True

False

13.

1 point

The Roth IRA is an after-tax investment that grows tax free.

True

False

14.

1 point

Which is an advantage of a Roth IRA?

Offers more choices

Grows tax free

Higher bracket at retirement

All of the above

15.

1 point

When seeking a financial counselor to help you with your investments, always go with:

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

A family member

The most popular adviser in your town

Your best friend

16.

1 point

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

True

False

17.

1 point

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

The Roth IRA grows tax free; the traditional IRA doesn’t.

Contributions to your Roth are pre-tax; contributions to a traditional IRA are after-tax.

A traditional IRA grows tax free; the Roth IRA doesn’t.

There is no difference.

18.

1 point

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

6 years

7.5 years

7 years

6 months

19.

1 point

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

It is better not to save and to make them pay for it themselves

Use tax-favored plans

Pull out loans

Use savings bonds

20.

1 point

What definition best explains an IRA?

The tax treatment on virtually any type of investment

A type of investment at a bank

A type of investment at a bank or investment firm that has good tax benefits

Investment that uses pre-tax dollars