AFK AFK Retirement Planning 2 — Questions and Answers
Question 1: Which Social Security claiming strategy maximizes lifetime benefits for a healthy individual expected to live well beyond average life expectancy?
- Claiming at age 62
- Claiming at full retirement age
- Delaying until age 70 (Correct answer)
- Claiming spousal benefits only
Correct answer: Delaying until age 70
Delaying Social Security to age 70 earns delayed retirement credits (8% per year after full retirement age), maximizing monthly benefits for long-lived individuals.
Question 2: What is the maximum employee elective deferral limit for a 401(k) plan in 2024?
- $20,500
- $22,500
- $23,000 (Correct answer)
- $25,000
Correct answer: $23,000
The 2024 employee elective deferral limit for 401(k) plans is $23,000.
Question 3: In a 403(b) plan, who is the typical eligible employer?
- Private for-profit corporations
- Self-employed individuals
- Tax-exempt organizations and public schools (Correct answer)
- Federal government agencies
Correct answer: Tax-exempt organizations and public schools
403(b) plans are retirement plans available to employees of public schools and tax-exempt organizations such as nonprofits and hospitals.
Question 4: What does vesting in a 401(k) employer match refer to?
- The employee's right to direct investments
- The employee's ownership of employer-contributed funds over time (Correct answer)
- The annual contribution limit set by the IRS
- The tax treatment of plan distributions
Correct answer: The employee's ownership of employer-contributed funds over time
Vesting schedules determine when employees gain full ownership of employer matching contributions, with full vesting typically occurring after a set number of years.
Question 5: Which retirement plan is specifically designed for self-employed individuals and small business owners with no employees other than a spouse?
- SIMPLE IRA
- Solo 401(k) (Correct answer)
- 457(b)
- Pension Benefit Guaranty plan
Correct answer: Solo 401(k)
A Solo 401(k) (Individual 401(k)) is designed exclusively for self-employed individuals with no full-time employees other than a spouse.
Question 6: Under the Social Security full retirement age rules, what is the full retirement age for individuals born in 1960 or later?
- 65
- 66
- 66 and 10 months
- 67 (Correct answer)
Correct answer: 67
For individuals born in 1960 or later, the full Social Security retirement age is 67.
AFK AFK Retirement Planning 2
Which Social Security claiming strategy maximizes lifetime benefits for a healthy individual expected to live well beyond average life expectancy?