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LET’S PRACTICE
Name: _____________________________________________________________________________
Gunnar and Eloise Tackle Retirement
Remember Eloise and Gunnar from Chapter 1? They’re learning about retirement terms and concepts and working on their retirement plan. They’re confused. Please help them!
1. Gunnar wants to know what IRA means and what an IRA is? _ ___________________________________________________ _ ___________________________________________________ 2. Gunnar wonders where an IRA account can be opened and whether, at age 30, he is too young for this kind of account. _ ______________________________________________________________________________ _ ______________________________________________________________________________ 3. Eloise has a few employees and wants to encourage them to save for retirement. She wants to sponsor an IRA retirement plan for them and match their contributions up to 3% of their pay. What kind of IRA would this be? _ ______________________________________________________________________________ 4. Help Eloise complete this chart to organize information about IRAs: TRADITIONAL ROTH SIMPLE SEP Contributions are made in pretax dollars No withdrawals before 59 ½ Maximum Annual Contribution $5500 $5500 $12,500 $53,000 Employer Sponsored Earnings and withdrawals are tax free PRODUCT PREVIEW
Earnings are tax deferred Available to freelancers Substantial IRS penalty for early withdrawal 100% employer funded
THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY 191
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