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2.Sally and Patrick are married with 4 young children. Patrick stays at home with the kids while Sally works as CEO of a small manufacturing firm earning $105,000 annually. Sally is covered by a 401(k) plan at work, but they would like to maximize their IRA contributions as well. Which of the following are true assuming their AGI is $105,897?

a. Sally and Patrick could each contribute $6,500 to a Roth IRA.

b. Sally and Patrick could each contribute $3,000 to a deductible traditional IRA

.c. Only Sally can contribute to any type of IRA. Patrick has no earned income.

d. Patrick could contribute $5,500 to a traditional deductible IRA.e. "Sally and Patrick could each contribute $6,500 to a Roth IRA" and "Patrick could contribute $5,500 to a traditional deductible IRA"

3.INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.

You can offset the effects of earning a lower rate of return by [increasing the amount you invest each year | shortening the period over which you build up your retirement account].

18.A $2,000 annual contribution to a retirement account earning 6% will be worth ____ in 20 years.

a. $26,360

b. $73,570

c. $12,000

d. $222,860

e. $59,560

19.Employees of state and local governments cannot participate in the Social Security system.

a. True b. False

26.The number of new retirement plans started among small businesses is growing.

a. True b. False

31.The size of your retirement nest egg will depend on

a. how much you contribute each year.

b. when you start your program.

c. the rate of return you earn on your investments.

d. All of these choices are correct.

e. None of these choices are correct.

28.INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.

With an IRA, the [account owner | institution] is the trustee.

33.At age 25, Julie invests $2,000 at an average rate of return of 6 percent. Approximately how much will Julie have by the time she is 65?

a. $250,000

b. $309,000

c. $486,000

d. $10,000

e. $100,000

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