Question 1 (2 points) The expense method is more accurate than the replacement ratio method for estimating retirement income needs. True False Question 2 (2 points) Ira D. Posit, age 59, withdrew money from his IRA to pay for a niece's college expenses. Ira must pay income tax but no penalty tax on the amount withdrawn. True False Question 3 (2 points) Alice, age 60, has a 6-year-old Roth IRA. Alice can withdraw her initial investment and all investment income and gains tax free. True False Question 4 (2 points) Social Security was designed to serve as an adequate retirement plan for those with no other retirement savings. True False Question 5 (3 points) Which of the following is not an acceptable method for overcoming a retirement shortfall? O increase pre-retirement savings invest a large portion of a retirement portfolio in a high-risk investment to obtain a higher return O retire later tap into home equity cut back on expenses before retirement Question 6 (3 points) Minnie and Micky Pluck are married, filing jointly. Minnie earns $60,000 a year and takes full advantage of her employer's qualified retirement plan. Micky is not employed. Minnie can make a nondeductible IRA contribution, but Micky cannot make an IRA contribution because he has no earned income. Both Micky and Minnie can make a nondeductible IRA contribution. Micky cannot make an IRA contribution. Micky can receive a partial deduction for an IRA contribution. Micky can receive a full deduction for an IRA contribution. Question 7 (3 points) A tax-free rollover of a Roth IRA can be made to O another Roth IRA O a traditional IRA O a tax-deferred annuity a and b O a and c Question 8 (4 points) You are assisting your client, Selena Hermione, with her retirement planning. Selena would like to have retirement income of 85% of her current salary of $110,000. Selena is currently 30 years from retirement and is planning for 20 years in retirement. She currently has a retirement fund of $200,000. You are allowing for inflation of 2.5% annually and expect to earn an 8% after-tax return. Adjusting for inflation, how much income will Selena need to provide for her first year of retirement? 213,952 110,000 93,500 196,123 178,293 uestion 9 (5 points) You are assisting your client, Selena Hermione, with her retirement planning. Selena would like to have retirement income of 85% of her current salary of $110,000. Selena is currently 30 years from retirement and is planning for 20 years in retirement. She currently has a retirement fund of $200,000. You are allowing for inflation of 2.5% annually and expect to earn an 8% after-tax return. How much capital will she need at retirement to fund those living expenses? She plans to take annual withdrawals at the BEGINNING of each year. Please allow for an annual cost of living increase. $2,724,241 $2,083,121 $2,497,221 $2,200,000 $1,870,000 Question 10 (4 points) You are assisting your client, Selena Hermione, with her retirement planning. Selena would like to have retirement income of 85% of her current salary of $110,000. Selena is currently 30 years from retirement and is planning for 20 years in retirement. She currently has a retirement fund of $200,000. You are allowing for inflation of 2.5% annually and expect to earn an 8% after-tax return. How much should Selena invest at the END of each year to provide her with that amount of capital at retirement? $4,279 $9,284 2,239 $1,841 $1,748
