08188000 Retirement and Estate Planning - 63274

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EXAMINATION NUMBER:

08188000 Retirement and Estate Planning

1. You’re interested in a retirement plan for employees that allows them to invest before tax dollars in a tax deferred saving plan. You should consider a

A. guaranteed investment contract.

B. 401(k) plan.

C. profit-sharing plan.

D. qualified pension plan.

 

2. Which of the following is a correct statement about a will?

A. If there’s no tax clause in a will, no taxes need be paid.

B. If there’s no tax clause in a will, the apportionment statues apply.

C. If there’s no tax clause in a will, an attorney will calculate them.

D. If there’s no tax clause in a will, the disposition provision applies.

 

3. Which of the following is a correct statement regarding a deferred annuity?

A. It’s an excellent savings and retirement vehicle even though it has no tax advantages.

B. It has a limitation in that you must pay for the entire annuity with a single upfront payment.

C. It can’t be used very well with an estate plan because it has no survivorship benefit.

D. It’s the opposite of life insurance since it provides for the systematic liquidation of savings.

 

4. The aging of Americans will have an economic impact on social security trust funds and

private pensions based on projections during the next twenty years. What best describes the aging demographics in terms of the percentage of the population over age 65?

A. Stable C. Slight increase

B. Declining D. Substantial increase

 

5. With respect to social security benefits, which statement is true?

A. Benefits are calculated solely based on payments to the trust fund.

B. Benefits are based solely on need.

C. If you retire at age 62, your benefits will be reduced.

D. You can receive full benefits with twenty quarters of wages subject to FICA.

 

6. The government has passed an important law that protects employees who participate in a

private pension plan. This law is known as the

A. Employee Pension Protection Act.

B. Employee Retirement Income Act.

C. Pension Benefit Guaranty Act.

D. Pension and Retirement Income Act.

 

7. Who needs to develop an estate plan?

A. Children who may inherit wealth in future

B. Only very wealthy people

C. Only married couples

D. Anyone that wants to control the disposition of assets upon death

 

8. Your real and personal property that can be transferred according to the terms of a will is

called your

A. gross estate. C. net estate.

B. probate estate. D. estate.

 

9. Your probate estate includes

A. assets held in revocable trusts out of your control.

B. all assets, real and personal, that are owned in the name of the decedent.

C. all assets in which the decedent had any direct or indirect beneficial interest.

D. only intestate assets.

 

10. Life insurance could alleviate estate problems caused by

A. inflation. C. disabilities.

B. improper management. D. lack of liquidity.

 

11. You’re in a pension plan that requires the company to fund the pension benefits and

therefore bear the pension costs. This pension plan is considered a _______ plan.

A. noncontributory C. contributory

B. vested rights D. defined contributory

 

12. You’re a participant in a pension plan that offers a specific payment formula of benefits

when you retire. What kind of plan is this?

A. Defined contribution plan C. Vested rights plan

B. Noncontributory plan D. Defined benefit plan

 

13. Your company wants to deduct its contributions to the pension plan as a tax deductible

expense and has applied to the Internal Revenue Service to treat the plan as a _______

plan.

A. IRS approved pension C. qualified pension

B. ERISA pension D. funded pension

 

14. You want to start planning for retirement and you learned about the mistakes that people

often make. Which of the following is a retirement planning mistake?

A. Saving too much C. Starting to invest too late

B. Investing in an IRA D. Investing for the long-term

 

15. A key factor in setting your retirement goals in relation to the amount of money you must

have to retire is

A. where you want to live.

B. your hobbies.

C. your planned age at retirement.

D. the types of retirement plan you have.

16. After you’ve completed a detailed projection of your living expenses requirements at

retirement, you must apply an expense factor to account for

A. uncertainty. C. mortality.

B. investment results. D. inflation.

 

17. You’re 95 years old and under the care of a trusted grandson.  You decide that you want to

give all your assets away to your relatives to avoid having a will and trust so that there will

be little in your estate to probate. A significant flaw of such a plan is

A. you don’t know how to divide it up C. gift taxes

B. state law requirements to have a witness D. inheritance

 

18. Which of the following is true?

A. A will can never be revoked.

B. A will doesn’t need to be in writing or have a witness.

C. The testator of the will is also the executor.

D. An order to change a will is a codicil.

 

19. A provision that will determine what type of health care you receive in a terminal illness is

A. a living will. C. power of attorney.

B. joint tenancy. D. a living trust.

 

20. You aren’t married. Which form of property ownership can’t exist in your estate?

A. Joint tenancy with right of survivorship C. Single ownership

 

B. Tenancy by the entirety D. Beneficial ownership in trust

Solution Description

1. You’re interested in a retirement plan for employees that allows them to invest before tax dollars in a tax deferred saving plan. You should consider a

A. guaranteed investment contract.

B. 401(k) plan.

C. profit-sharing plan.

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