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economics chapter 3
Dave Ramsey test 2-11-15
| Question | Answer |
|---|---|
| Retirement plan for self-employed people | SEPP |
| Grows tax-free | Roth IRA |
| The typical retirement plan found inmost corporations | 401(k) |
| Used for college savings | ESA |
| The typical retirement plan found in non-profit groups such as schools and hospitals | 403(b) |
| True or False: Pre-tax means the government is letting you invest money before taxes have been taken out. | True |
| True or False: Savings bonds are a good way to save for college. | False |
| True or False: Never borrow money from your retirement plan unless you are trying to avoid bankruptcy. | True |
| True or False: When you leave a company, don't move your money from the retirement account. | False |
| True or False: An IRA is a pacific type of investment. | False |
| What IRA grows tax-free? | Roth IRA |
| What is an Educational Savings Account (ESA) used for? | college |
| Which of these is not a retirement plan? 529, 401(k), 403(b), 457 | 529 |
| What is not a benefit of a Roth IRA? | unlimited contributions |
| If you contribute $2,300 to your 401(k) and your company matches up to 3%, how much is in the account (assume you have not gone over the 3% match)? | if you match it you double it so the answer is $4,600 |
| What should you do with your retirement accounts when you leave a company? | direct transfer |
| What do you never use to save for college? | pre-paid tuition and savings bonds |
| What is Baby Step 5? | college funding |
| What are the advantages of a Roth IRA? | It grows tax-free, offers more choices and more flexibility |
| List some ways you can avoid student loan debt if you do not have a college fund. | scholarships, part-time jobs, military |
| What is meant by tax-favored dollars? | money that has special tax treatment or is protected against certain taxes |
| Why worry about retirement when every worker pays into Social Security? | 1. You are responsible for your retirement, no one else. 2. The government may not have the money promised when needed. 3. If you have only social security you will have a low standard of living. |
| Explain how the rule of 72 works | Interest rate divided by 72 equals the number of years to double your money. 72 divided by the number of years equals interest rate to double your money. |
| Case Studies |
Created by:
a.allsup
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