Test Your IRA IQ

Find out how much you really know about IRAs and retirement investing!

• This often cited guideline states that your retirement savings should last 30 years if you withdraw no more than what percentage of your retirement savings each year after adjusting the first year amount for inflation?
  1. 4% Correct. Retired financial adviser Bill Bengen originated the “Four percent rule” in 1994.
  2. 2% Sorry, incorrect. Retired financial adviser Bill Bengen originated the “Four percent rule” in 1994.
  3. 5% Sorry, incorrect. Retired financial adviser Bill Bengen originated the “Four percent rule” in 1994.
  4. 10% Sorry, incorrect. Retired financial adviser Bill Bengen originated the “Four percent rule” in 1994.
• Which of the following is true about self-directed IRA accounts?
  1. Money from a self-directed 401k is typically used to fund them Sorry, incorrect. Self-directed 401k accounts don’t exist. Investors make their own investment decisions in a self-directed IRA.
  2. Self-directed IRA investors make their own investment decisionsCorrect.
  3. They may not be used to buy more traditional investments like stocks or bonds Sorry, incorrect. Self-directed IRA accounts may also invest in traditional investments. Investors make their own investment decisions in a self-directed IRA.
  4. They were specifically authorized by Federal law in 1996 as an alternative to traditional and SEP IRAs Sorry, incorrect. Self-directed IRA accounts were authorized under the Employee Retirement Income Security Act of 1974. Investors make their own investment decisions in a self-directed IRA.
• To estimate what percentage of your portfolio should be in conservative investments versus stocks as your approach retirement, a popular rule of thumb suggests:
  1. Using 100 minus your age for the percentage of stocks Correct
  2. 90% minus the number of years from your target retirement Sorry, incorrect. Use 100 minus your age to determine the recommend percentage of stocks in your portfolio.
  3. 25% plus you’re your number of years over 55 Sorry, incorrect. Use 100 minus your age to determine the recommend percentage of stocks in your portfolio.
  4. 50% before retirement and 75% upon retirement Sorry, incorrect. Use 100 minus your age to determine the recommend percentage of stocks in your portfolio.

• A self-directed IRA account holder may invest in all of the following except?
  1. Platinum bullion Sorry, incorrect. Precious metals may be held in an IRA, but not collectables including rare coins
  2. Tax lien certificates Sorry, incorrect. Tax lien certificates and even unsecured notes may be held in an IRA, but not collectables including rare coins
  3. A duplex Sorry, incorrect. Real estate may be held in an IRA, but not collectables including rare coins
  4. Rare coinsCorrect. Collectables including rare coins may not be held in a self-directed IRA.
• In June 2015, the Wall Street Journal reported that the average yield for money market accounts for the nations largest banks was approximately:
  1. -0.01% Sorry, incorrect. 0.36% was reported as the average in June 2015.
  2. 0.01% Sorry, incorrect. 0.36% was reported as the average in June 2015.
  3. 0.36% Correct.
  4. 1.0% Sorry, incorrect. 0.36% was reported as the average in June 2015.