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Benefits Beginner: Introduction to 401(k) Plans

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1.
Which of the following 401(k) distributions may incur a penalty if taken prior to age 59½?
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Paying for rent. Paying for rent is not one of the allowed hardship exceptions.
2.
A _______ moves funds from one 401(k) to another without you ever touching the funds.
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Direct rollover. This form of rollover takes place between your current account's custodian and the new one you have elected.
3.
In a SIMPLE 401(k) plan, the employer may make either matching or non-matching contributions.
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True. The employer is allowed to choose an option.
4.
Assume that Mary earns $200,000 this year and defers $10,000 into her 401(k) plan. How much is her employer required to match?
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$0. Employers are not required to match contributions.
5.
If an employee defers 8 percent of his or her wages into a 401(k) plan, and the employer contributes an additional 3 percent, the employer is making a matching contribution.
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True. The employer is making a matching contribution.
6.
To roll over a 401(K) plan means to _______.
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Move it to a new custodian. Rolling over means moving from one custodian to another.
7.
If your employer matches your contributions to your Roth 401(k), those employer contributions are _______.
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Pre-tax. Despite the Roth 401(k)'s purpose, these matches are actually pre-tax; but when you withdraw them, they will be taxed.