Pearson Vue
- Life Insurance & Retirement Planning Licensing
{COMPLETE TEST BANK}
Verified Multiple Choice and Conceptual Actual Emended
Exam Questions With Reviewed 100% Correct
Detailed Answers
Guaranteed Pass!!Current Update
1. A 401(k) plan allows employees to:
A) Make salary-deferral contributions on a pre-tax basis
B) Contribute after-tax only
C) Avoid IRS contribution limits
D) Withdraw without penalty before age 59½
Answer: A
2. True or False: Employer contributions to a 401(k) plan are tax-deductible to
the employer.
Answer: True
3. Which of the following employees is eligible for a 403(b) plan?
A) A teacher at a public school
B) A manager at a retail company
C) A private-sector executive
D) A construction worker in a union
Answer: A
4. 403(b) plans are also referred to as:
Answer: Tax-Sheltered Annuities (TSAs)
5. A 457 plan is primarily available to:
A) Nonprofit organizations and public schools
, B) State and local government employees
C) All for-profit companies
D) Self-employed individuals
Answer: B
6. True or False: 457 plan contributions are made with after-tax dollars.
Answer: False — they are pre-tax
7. At what age must participants begin Required Minimum Distributions
(RMDs) for a 401(k)?
Answer: 73 (as of 2025 law)
8. Early withdrawals from a 401(k) before age 59½ are generally subject to:
Answer: Ordinary income tax + 10% penalty
9. Which plan type allows both employee deferrals and employer matching
contributions?
Answer: 401(k)
10.True or False: Loans may be allowed from a 401(k) but not from a 403(b)
plan.
Answer: False — both may allow loans depending on the plan
11.The maximum number of employees for an employer to establish a SIMPLE
IRA is:
Answer: 100
12.True or False: SIMPLE IRAs require employer contributions.
Answer: True
13.Which of the following is NOT an option for employer contributions under a
SIMPLE IRA?
A) Dollar-for-dollar match up to 3% of compensation
B) 2% nonelective contribution for all eligible employees
C) No contribution at all
D) Contributions must be fully vested
Answer: C
,14.In a SEP IRA, contributions are made by:
A) Employees only
B) Employers only
C) Both employer and employee equally
D) The federal government
Answer: B
15.True or False: SEP IRA contributions are discretionary each year.
Answer: True
16.SEP IRAs are most commonly used by:
Answer: Small businesses and self-employed individuals
17.SIMPLE IRA contributions are:
A) Pre-tax and tax-deferred until withdrawal
B) Taxable immediately
C) Treated as Roth contributions
D) Limited to $1,000 per year
Answer: A
18.Which penalty applies for early withdrawal from a SIMPLE IRA within the
first 2 years of participation?
Answer: 25% penalty
19.True or False: SEP contributions are 100% vested immediately.
Answer: True
20.The main advantage of SEP IRAs for employers is:
Answer: Higher contribution limits and flexibility
21.Contributions to a Traditional IRA may be:
A) Tax-deductible depending on income and participation in employer plans
B) Always after-tax only
C) Limited to employer contributions
D) Tax-free withdrawals at any age
Answer: A
, 22.True or False: Roth IRA contributions are always made with after-tax dollars.
Answer: True
23.At what age must Traditional IRA owners begin taking RMDs?
Answer: 73 (as of 2025 law)
24.True or False: Roth IRAs have no Required Minimum Distributions during
the owner’s lifetime.
Answer: True
25.Early withdrawals from a Traditional IRA are generally subject to:
Answer: Ordinary income tax + 10% penalty (if under 59½)
26.Qualified Roth IRA withdrawals are:
Answer: Tax-free if the account is at least 5 years old and the owner is 59½
or older
27.Which type of IRA is best for someone who expects to be in a higher tax
bracket during retirement?
Answer: Roth IRA
28.True or False: Contributions to a Roth IRA are deductible on federal income
tax returns.
Answer: False
29.The annual contribution limit for IRAs (Traditional + Roth combined) is:
Answer: $7,000 (or $8,000 if age 50+) as of 2025
30.If an individual contributes to both a Traditional and a Roth IRA, the
combined contributions:
Answer: Cannot exceed the annual IRA contribution limit
31.Term life insurance provides coverage for:
A) The entire lifetime of the insured
B) A specified period of time
C) Until age 100 only
D) As long as premiums are paid
Answer: B) A specified period of time
- Life Insurance & Retirement Planning Licensing
{COMPLETE TEST BANK}
Verified Multiple Choice and Conceptual Actual Emended
Exam Questions With Reviewed 100% Correct
Detailed Answers
Guaranteed Pass!!Current Update
1. A 401(k) plan allows employees to:
A) Make salary-deferral contributions on a pre-tax basis
B) Contribute after-tax only
C) Avoid IRS contribution limits
D) Withdraw without penalty before age 59½
Answer: A
2. True or False: Employer contributions to a 401(k) plan are tax-deductible to
the employer.
Answer: True
3. Which of the following employees is eligible for a 403(b) plan?
A) A teacher at a public school
B) A manager at a retail company
C) A private-sector executive
D) A construction worker in a union
Answer: A
4. 403(b) plans are also referred to as:
Answer: Tax-Sheltered Annuities (TSAs)
5. A 457 plan is primarily available to:
A) Nonprofit organizations and public schools
, B) State and local government employees
C) All for-profit companies
D) Self-employed individuals
Answer: B
6. True or False: 457 plan contributions are made with after-tax dollars.
Answer: False — they are pre-tax
7. At what age must participants begin Required Minimum Distributions
(RMDs) for a 401(k)?
Answer: 73 (as of 2025 law)
8. Early withdrawals from a 401(k) before age 59½ are generally subject to:
Answer: Ordinary income tax + 10% penalty
9. Which plan type allows both employee deferrals and employer matching
contributions?
Answer: 401(k)
10.True or False: Loans may be allowed from a 401(k) but not from a 403(b)
plan.
Answer: False — both may allow loans depending on the plan
11.The maximum number of employees for an employer to establish a SIMPLE
IRA is:
Answer: 100
12.True or False: SIMPLE IRAs require employer contributions.
Answer: True
13.Which of the following is NOT an option for employer contributions under a
SIMPLE IRA?
A) Dollar-for-dollar match up to 3% of compensation
B) 2% nonelective contribution for all eligible employees
C) No contribution at all
D) Contributions must be fully vested
Answer: C
,14.In a SEP IRA, contributions are made by:
A) Employees only
B) Employers only
C) Both employer and employee equally
D) The federal government
Answer: B
15.True or False: SEP IRA contributions are discretionary each year.
Answer: True
16.SEP IRAs are most commonly used by:
Answer: Small businesses and self-employed individuals
17.SIMPLE IRA contributions are:
A) Pre-tax and tax-deferred until withdrawal
B) Taxable immediately
C) Treated as Roth contributions
D) Limited to $1,000 per year
Answer: A
18.Which penalty applies for early withdrawal from a SIMPLE IRA within the
first 2 years of participation?
Answer: 25% penalty
19.True or False: SEP contributions are 100% vested immediately.
Answer: True
20.The main advantage of SEP IRAs for employers is:
Answer: Higher contribution limits and flexibility
21.Contributions to a Traditional IRA may be:
A) Tax-deductible depending on income and participation in employer plans
B) Always after-tax only
C) Limited to employer contributions
D) Tax-free withdrawals at any age
Answer: A
, 22.True or False: Roth IRA contributions are always made with after-tax dollars.
Answer: True
23.At what age must Traditional IRA owners begin taking RMDs?
Answer: 73 (as of 2025 law)
24.True or False: Roth IRAs have no Required Minimum Distributions during
the owner’s lifetime.
Answer: True
25.Early withdrawals from a Traditional IRA are generally subject to:
Answer: Ordinary income tax + 10% penalty (if under 59½)
26.Qualified Roth IRA withdrawals are:
Answer: Tax-free if the account is at least 5 years old and the owner is 59½
or older
27.Which type of IRA is best for someone who expects to be in a higher tax
bracket during retirement?
Answer: Roth IRA
28.True or False: Contributions to a Roth IRA are deductible on federal income
tax returns.
Answer: False
29.The annual contribution limit for IRAs (Traditional + Roth combined) is:
Answer: $7,000 (or $8,000 if age 50+) as of 2025
30.If an individual contributes to both a Traditional and a Roth IRA, the
combined contributions:
Answer: Cannot exceed the annual IRA contribution limit
31.Term life insurance provides coverage for:
A) The entire lifetime of the insured
B) A specified period of time
C) Until age 100 only
D) As long as premiums are paid
Answer: B) A specified period of time
