Benefits
What are benefits?
Anything other than regular pay that a company offers its employees
What is one advantage of employee retirement plans?
There are several advantages including free money, tax benefits, convenience, and intentionality.
What do banks do with excess reserves?
Loan them out to make a profit
True or False: It is illegal to drive a car that does not have car insurance.
True
What government agency is responsible for making sure people pay their taxes?
IRS: Internal Revenue Service
Why do employers provide benefits?
To attract and retain employees
What is one big challenge of retirement for a lot of people?
There are a lot of potential answers to this, but some of the main ones we have discussed are having less/no income in retirement and potentially living a long time without that extra money.
Why is it a good idea to make sure a bank is FDIC insured before you deposit money there?
That way if anything happens to your money, you can get it back from the FDIC.
True or False: If you own home insurance, it will cover every potential thing that can happen to your home.
False- home insurance will only cover the specific things that are spelled out in the contract. You may sometimes have to buy other types of insurance, such as flood insurance, if you want to keep your home fully protected.
What is the name for the type of professional who can help answer tax questions or file your taxes for you?
Accountant
What is one big advantage of employee health care plans compared to health care plans you can purchase on your own?
Cheaper, more convenient, easier to understand
Of a 401(k) and a pension, which one is likely to give you more control over your investments?
401(k)- these tend to let investors make their own investment decisions. The investments in a pension fund are determined by the company and apply to all employees, instead of letting individual employees make investment decisions.
What is the central bank of the United States called?
The Federal Reserve
What does it mean that "it is better to have insurance and not need it than need it and not have it."
If you have insurance and don't need it, all that happens is you pay a (relatively) small monthly fee. If you need insurance and don't have it, you may end up with a huge bill.
Distinguish between the following three types of tax forms: W-2, 1040, W-4.
W-4: the form you fill out when you start a new job that determines what taxes are withheld from your paycheck
W-2: the form you receive from your employer at the end of the year that shows how much you made, how much was withheld in taxes, etc. This information is used to file your taxes.
1040: the form you fill out to file your taxes after you have received your W-2.
What is employee turnover and how do benefits help to keep it low?
Employee turnover: the number of employees who leave a company over a period of time. Benefits help to keep it low because they make employees happier and less likely to leave the company.
Of a 401(k) and a pension plan, which one is likely to provide guaranteed income?
Pension plan- many pension plans (but not all) provide fixed income for retirement. 401(k) plans pretty much never provide fixed income.
What is the required reserve ratio?
The required reserve ratio tells the bank how much of their reserves (in percentage) will need to be kept on hand at any given point in time. The rest is considered "excess reserves" and the bank has more flexibility with what they want to do with it.
What is a deductible?
The amount that a person has to pay in a year before insurance will begin to cover certain types of expenses
What are tax brackets?
Tax brackets show what percentage people pay in taxes for each tier of income.
What are some ways that employee turnover can harm a company?
There are a lot of potential answers to his question, for example: makes it harder to find employees, makes it harder to get investors/loans, gives your company a bad reputation, can lose valuable skills/knowledge, costs the company time/money, etc.
What is the main risk of a 401(k) plan? What is the main risk of a pension?
401(k): you make poor decisions and lose your money.
Pension: the company invests poorly and you don't get your money.
What are two roles the central bank plays in our society?
The central bank controls the amount of money in the economy by printing money or taking money out of circulation. It also can raise or lower interest rates.
Explain the concept of transfer of risk.
When someone buys insurance, they transfer the risk of something bad happening over to the insurance company. If you don't buy insurance, you are taking the risk that you will have to cover the bills if an emergency happens. If you buy insurance, the insurance company is the one who is taking the risk of having to cover the bills if an emergency happens.
Does anyone pay a higher rate for the same income with taxes (not counting deductions/credits)?
No, everyone pays the same rate on each tier of their income.