Test your knowledge

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

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1.
An annuity is a contract with a life insurance company.
Choose wisely. There is only one correct answer.
True. An annuity can be bought only from an insurance company.
2.
To lower your minimum required retirement distribution, you can use only the joint life expectancy of you and your spouse.
Choose wisely. There is only one correct answer.
True. You can use only the joint life expectancy table for you and a spouse who is 10 or more years younger as beneficiary to lower your minimum required distribution.
3.
Distributions you receive from ordinary qualified retirement and IRA accounts are taxed at what rate upon withdrawal?
Choose wisely. There is only one correct answer.
Your regular income tax rate. Distributions are taxed at your regular income tax rate -- a fact that may call for some tax planning on your part.
4.
If your income is below $32,000, your Social Security benefits will not be taxed.
Choose wisely. There is only one correct answer.
False. It depends on your filing status. If your income is above $25,000 (single) and $32,000 (joint), your Social Security benefits can be taxed at 50 to 85 percent.
5.
The tax penalty for early withdrawal from your IRA account is 10 percent.
Choose wisely. There is only one correct answer.
True. This penalty is meant to discourage you from taking out your money before the allowed time.