Retirement Plan Basics
Most common retirement plan using post-tax/already taxed money.
Roth IRA
Common pre-tax account used for qualified medical expenses.
HSA - Health Savings Account.
What does the acronym "GAAP" stand for?
Generally Accepted Accounting Principles.
When is it best to start putting money into an account with compounding interest?
As early as possible!
Are you able to remove money from your retirement account early? Why would you not want to?
Yes. High penalties and losing out on earning income/gains within the account.
Most common retirement plan using pre-tax/not yet taxed money.
Traditional IRA.
If used for the appropriate expense, do you ever pay tax on money in/out of an HSA?
No tax!
What is the name of the largest ocean on Earth?
Pacific Ocean.
Basic concept of compounding interest.
Earning interest on interest already earned.
Do you ever pay fees in a retirement account?
Yes, administration fees flow to account holders.
Is your retirement account impacted by the market?
Most definitely yes! But historically the market goes up over time.
Is an employer allowed to contribute to your HSA? Bonus: if so, will you be taxed on those contributions?
Yes, No.
What is the name of the longest river in the world?
Nile River.
You typically cannot get an HSA without a what type of deductible health insurance plan?
A high deductible health insurance plan.
Can an HSA be transferred to a different employer or kept after leaving your employer?
Typically yes!
Name a benefit of contributing to retirement accounts.
Wealth accumulation in a tax advantaged account, reduced need for large/late in life savings, power of exponential growth, among many others.
What are 2+ examples of qualified medical expenses as it relates to HSAs?
deductibles and co-payments, coinsurance, prescriptions, some over the counter medications, etc.
(Dad joke) Why was the accountant depressed?
It's an accrual world :)
What is the formula for calculating compound interest when interest is compounded annually?
A = P(1 + r)^t (where A is the future value, P is the principal, r is the interest rate, and t is the time in years)
Explain a situation where a Roth IRA would be beneficial over a Traditional 401(k).
When income is in a low tax bracket now versus in the future. Not taxed on earnings.
Early withdrawal penalty for taking money in retirement account before age 59 1/2.
10% (on top of income tax if pre-tax account).
Major difference between HSA and FSA.
There are many minor differences, but the major difference is HSA can carry on, FSA is typically use-it-or-lose-it.
Al Capone couldn't be brought down by the police or his enemies, instead he was brought down by.... accountants. How
Forensic accountants played a crucial role in the investigation and eventual conviction of the notorious gangster Al Capone for tax evasion, establishing the importance for modern forensic accounting in criminal justice.
What is the rule of 72 as it relates to compound interest?
Taking 72 divided by an (annual) interest rate shows you how long it will take to double your money.
Name a way to get money from your retirement account company, before retirement age, without taking a penalty.
Taking a loan on the account.