Podcast
Questions and Answers
What is the requirement for the number of quarters an individual must be employed in a job covered by Social Security to qualify for retirement benefits?
What is the requirement for the number of quarters an individual must be employed in a job covered by Social Security to qualify for retirement benefits?
According to Melissa's retirement plan, what type of vesting does she have after 3 years of full-time employment?
According to Melissa's retirement plan, what type of vesting does she have after 3 years of full-time employment?
In Melissa's retirement plan, does she have to make investment decisions regarding her retirement plan?
In Melissa's retirement plan, does she have to make investment decisions regarding her retirement plan?
Which type of retirement plan is Melissa's retirement plan based on the description provided?
Which type of retirement plan is Melissa's retirement plan based on the description provided?
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When does vesting take place for Melissa in her retirement plan?
When does vesting take place for Melissa in her retirement plan?
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Which type of retirement plan is becoming less common according to the text?
Which type of retirement plan is becoming less common according to the text?
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What federal income tax penalty will you face if you withdraw funds from most pension plans before age 59?
What federal income tax penalty will you face if you withdraw funds from most pension plans before age 59?
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Study Notes
Federal Insurance Contributions Act (FICA)
- FICA tax is paid equally by employer and employee.
Capital Gains
- A capital gain occurs when an asset is sold for more than its purchase price.
- Selling an asset for less than its purchase price does not result in a capital gain.
Charitable Contributions
- Contributions to a tax-deductible charity can reduce taxable income.
- The amount saved in taxes is dependent on the marginal tax bracket.
Tax Deductions
- The standard deduction is an alternative to itemized deductions.
- Tax credits reduce tax liability.
Mortgage Payments
- At the beginning of a loan, most of the monthly payment goes towards interest.
Life Insurance
- The primary purpose of life insurance is to provide financial security for dependents in the event of death.
- The needs analysis method is the most accurate way to determine the amount of life insurance coverage needed.
- A loan-to-value ratio of 80% or less is usually required to avoid private mortgage insurance (PMI).
Insurance
- Long-term care insurance helps with nursing home or in-home care due to chronic illness.
- Disability income policies usually have a waiting period before benefits are activated.
Credit Cards
- Interest charges can be avoided by paying the account balance in full every month.
Investments
- Loan maturity affects monthly payments and total finance costs.
- Mutual funds provide diversification of invested funds.
- The net asset value is the current market value of all securities a mutual fund owns, less any liabilities, on a per-share basis.
- A sector fund invests only in a particular industry.
Retirement Plans
- Vesting refers to the process of earning ownership of retirement plan benefits.
- Defined benefit plans are becoming less common.
- Withdrawals from pension plans before age 59½ may incur a 10% federal income tax penalty.
- The annuity disbursement option affects the size of monthly payments.
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Description
Test your knowledge on finance and taxation with questions about the Federal Insurance Contributions Act (FICA), capital gains, and more.
