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CWS Retirement Planning Flashcards

6 cards from real CWS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 CWS Retirement Planning flashcards as text

  1. A SEP-IRA allows an employer to contribute up to what percentage of an employee's compensation (2024)?

    Answer: 25%

    SEP-IRA employer contributions can be up to 25% of an eligible employee's compensation, not to exceed the annual dollar limit.

  2. What does the term 'sequence of returns risk' refer to in retirement planning?

    Answer: The danger that poor investment returns early in retirement can permanently impair a portfolio

    Sequence of returns risk is the danger that experiencing poor market returns in the early years of retirement, combined with withdrawals, can deplete the portfolio faster than average returns would suggest.

  3. A SIMPLE IRA is most appropriate for which type of employer?

    Answer: Small businesses with 100 or fewer employees wanting a low-cost retirement plan

    SIMPLE IRAs are designed for small businesses with 100 or fewer employees, offering straightforward administration and lower costs than a 401(k).

  4. What is the Social Security full retirement age (FRA) for individuals born in 1960 or later?

    Answer: 67

    For individuals born in 1960 or later, the Social Security full retirement age is 67, the maximum under current law.

  5. Which withdrawal strategy adjusts annual distributions based on portfolio performance to reduce the risk of portfolio depletion?

    Answer: The fixed percentage withdrawal strategy

    The fixed percentage withdrawal strategy withdraws a set percentage of the current portfolio value each year, naturally reducing withdrawals when the portfolio falls.

  6. What is the primary benefit of using a Health Savings Account (HSA) as a retirement planning tool?

    Answer: Triple tax advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses

    An HSA offers a triple tax advantage — pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses, making it a powerful retirement savings tool.