Choose wisely. There is only one correct answer to each question.
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1.
How should you choose from among your 401(k) plan options?
Choose options that will allow you to reach your financial goal. For some investors, that may mean stock funds only. For others, it may mean investing in bonds and cash options, too.
2.
When you choose from among your investment options as you set up your 401(k) plan, you should choose a little from each option.
False. As a rule, it is best to choose only those options that will help you reach your financial goal.
3.
The 401(k) plan is a type of _______.
Defined contribution plan. The amount of money that 401(k) plan participants receive in retirement is based on the amount that they (and their employers) contribute to the plan, in addition to the investment returns they earn on those contributions. "Defined benefit" plans, such as pensions, generally pay a guaranteed sum based on wages and years of service.
4.
How do you invest in a 401(k) plan?
Your employer automatically deducts your contribution from your pay. Investing in a 401(k) plan is automatic; your employer deducts your contribution from your pay. And although your employer may match all or part of your contribution, you need to contribute some of your salary to your 401(k) to receive an employer match.
5.
Your 401(k) plan has a legal limit to how much you can contribute. However, some plans have a lower ceiling, which is based on _______.
A percentage of your salary. This is typically a low percentage that can still add up nicely.
