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Question 1 of 10
1. Question
What are the types of individual retirement accounts available to investors?
I. SEP IRAs
II. Simplified employee pension plans
III. Roth IRAs
IV. Traditional IRAsCorrect
The three types of IRAs are traditional IRAs, Roth IRAs, and simplified employee pension plans, or SEP IRAs.
Incorrect
The three types of IRAs are traditional IRAs, Roth IRAs, and simplified employee pension plans, or SEP IRAs.
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Question 2 of 10
2. Question
If an investor is 55 years old how much money can he/she contribute under traditional IRA’s per year?
I. $3,200
II. $4,800
III. $6,500
IV. $5,500Correct
Traditional IRAs are accounts to which investors may contribute up to $5,500 ($6,500 if that person is over fifty years of age) per year, per individual (2018).
Incorrect
Traditional IRAs are accounts to which investors may contribute up to $5,500 ($6,500 if that person is over fifty years of age) per year, per individual (2018).
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Question 3 of 10
3. Question
Which statements is/are true in regards of traditional IRA’s?
I. The money contributed to this account must be a earned income.
II. When an investor’s total earned income is less than $4,800, the amount of the contribution is limited to the amount of earned income.
III.Investors withdraw funds from the account without incurring a 10 percent penalty’
IV. When an investor’s total earned income is more than $5,500, the amount of the contribution is not limited to the amount of earned income.Correct
The money contributed to the account must be earned income.If the investor’s total earned income is less than $5,500, the amount of the contribution is
limited to the amount of earned income.Investors may not withdraw funds from the account without incurring a 10 percent penalty.Incorrect
The money contributed to the account must be earned income.If the investor’s total earned income is less than $5,500, the amount of the contribution is
limited to the amount of earned income.Investors may not withdraw funds from the account without incurring a 10 percent penalty. -
Question 4 of 10
4. Question
What is the difference between Traditional IRA & Roth IRA?
I. The limit of contributions per year to Roth IRAs is $5,500 of earned income for the investors above 50 years of age.
II. The limit of contributions per year to Roth IRAs is $6,500 of earned income for the investors below 50 years of age.
III.Contributions in Roth IRA are not tax deductible.
IV. Contributions in Roth IRA are tax deductible.Correct
Unlike contributions to traditional IRAs, Roth IRA contributions are not tax deductible.
Incorrect
Unlike contributions to traditional IRAs, Roth IRA contributions are not tax deductible.
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Question 5 of 10
5. Question
Under which situation a taxpayer may not contribute to Roth IRA?
I. Individuals who file single income tax returns may not contribute if they made below $135,000 in 2018.
II. After the investor reaches the age of seventy and a half they may not contribute to Roth IRA.
III. Individuals who file single income tax returns may not contribute if they made over $135,000 in 2018.
IV. Married couples filing jointly may not contribute if their combined income is over $199,000 in 2018.Correct
Individuals who file single income tax returns may not contribute to Roth IRAs if they made over $135,000 in 2018. Married couples filing jointly may not contribute if their combined income is over $199,000 in 2018.
Incorrect
Individuals who file single income tax returns may not contribute to Roth IRAs if they made over $135,000 in 2018. Married couples filing jointly may not contribute if their combined income is over $199,000 in 2018.
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Question 6 of 10
6. Question
Which statements hold true for SEP IRA?
I. The percentage contributed must be equal for all employees and the employer.
II. SEP accounts allow employers to contribute money directly to each employee’s account.
III. An investor should be atleast 21 years of age for contributing to SEP IRA.
IV. The employer may contribute up to 25 percent of the employee’s salary each year, up to $55,000 as of 2018Correct
The employer may contribute up to 25 percent of the employee’s salary each year, up to $55,000 as of 2018. The percentage contributed must be equal for all employees and the employer.Eligible persons who may contribute to SEP accounts must be at least twenty-one years old
Incorrect
The employer may contribute up to 25 percent of the employee’s salary each year, up to $55,000 as of 2018. The percentage contributed must be equal for all employees and the employer.Eligible persons who may contribute to SEP accounts must be at least twenty-one years old
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Question 7 of 10
7. Question
Which of these statements regarding qualifies Keogh Plan is/are false?
I. Keogh plans are designed for self-employed persons, sole proprietors, and sole proprietors of professional practices.
II. Contributions are limited to $55,000 per year as of 2018.
III. All of the contributions to Keogh plans must be generated by self-employment income.
IV. Less attractive plan than IRAs to self-employed retirement investors.Correct
This makes them more attractive than IRAs to self-employed retirement investors.
Incorrect
This makes them more attractive than IRAs to self-employed retirement investors.
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Question 8 of 10
8. Question
What is the advantage that Roth 401(k) plan has over Roth IRA?
I. Employers are not allowed to contribute to Roth 401(k) plans on the employee’s behalf.
II. Roth 401(k) plans are funded with after-tax dollars.
III. There is no income limit for an investor to be able to contribute to a Roth 401(k).
IV. Employers are allowed to contribute to Roth 401(k) plans on the employee’s behalf.Correct
An advantage of the Roth 401(k) over the Roth IRA is that there is no income limit for an investor to be able to contribute to a Roth 401(k).
Incorrect
An advantage of the Roth 401(k) over the Roth IRA is that there is no income limit for an investor to be able to contribute to a Roth 401(k).
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Question 9 of 10
9. Question
Why do many companies prefer profit sharing retirement plans?
I. Amount of payments that they make can differ.
II. No profits made in a year= No contributions
III. Its easy to implement.
IV. Easily understood by employees.Correct
Many companies prefer profit- sharing plans because the amount of the payments that they make is allowed to vary and is tied to the profits of the company. If no profits are made in a year, no contribution is necessary, unlike contributions based on a percentage of salary. Also contributing to the popularity of the plans is their ease of implementation, administration, and understanding by employees.
Incorrect
Many companies prefer profit- sharing plans because the amount of the payments that they make is allowed to vary and is tied to the profits of the company. If no profits are made in a year, no contribution is necessary, unlike contributions based on a percentage of salary. Also contributing to the popularity of the plans is their ease of implementation, administration, and understanding by employees.
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Question 10 of 10
10. Question
Which statements is /are true in regards of 403(b) plans?
I. Contributions to a 403(b) plan are made with pretax dollars.
II. They are referred to as tax-sheltered annuities.
III.They are used for for-profit companies.
IV. Its a delayed taxation plan.Correct
A 403(b) retirement account is a deferred taxation plan.401(k) plans are used for for-profit companies. Occasionally, 403(b) plans are referred to as tax-sheltered annuities.Contributions to a 403(b) plan are made with pretax dollars.
Incorrect
A 403(b) retirement account is a deferred taxation plan.401(k) plans are used for for-profit companies. Occasionally, 403(b) plans are referred to as tax-sheltered annuities.Contributions to a 403(b) plan are made with pretax dollars.