Practice Quiz

Financial Planner

Category - Retirement Savings and Income Planning

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Your new client owns her own company and is 10 years from retiring, what would be the best plan for the client to consider?
  1. Cash Balance Plan
  2. Money Purchase Plans
  3. 412 (i) plan
  4. Thrift Plan
Explanation
Answer: C - 412 (i) plans are best for business owners that is 10 years from retiring. This is a defined benefit plan funded solely with life insurance and annuities. It is possible to contribute more to a 412 (i) plane due to the low guaranteed returns by the insurance companies on the life insurance and annuities, thus best for small business where the owner is within 10 years of retirement.
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