All Courses > Portfolios > 200
Portfolios 202: How Your 401(k) Plan Works

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Which of the following would your 401(k)'s plan document not tell you?
Choose wisely. There is only one correct answer.
How much your 401(k) will earn. The plan document has no way to know this.
2.
What are the tax advantages of a 401(k) plan?
Choose wisely. There is only one correct answer.
Both of the above. You defer taxes on any investment gains and distributions AND save on taxes now, because you're investing in your plan with pre-tax dollars.
3.
Your 401(k) plan's retirement planning tools will analyze _______.
Choose wisely. There is only one correct answer.
All of the above. These are typical factors that a program will look at.
4.
How do you invest in a 401(k) plan?
Choose wisely. There is only one correct answer.
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.
The 401(k) plan is a type of _______.
Choose wisely. There is only one correct answer.
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.