Future Business Leaders of America (FBLA) Personal Finance Practice Test

Which of the following is NOT considered a personal retirement account?

1. IRA

2. 401-K

3. Roth IRA

4. SIMPLE IRA

The correct answer is: 401-K

The 401(k) is actually considered a personal retirement account, as it is a type of employer-sponsored retirement plan that allows employees to save and invest a portion of their paycheck before taxes are taken out. While it is offered through employers, it is designed for individual retirement savings, which is why it's classified as a personal retirement account. In contrast, an IRA (Individual Retirement Account), Roth IRA, and SIMPLE IRA are all direct accounts that individuals can set up themselves, independent of their employer, although SIMPLE IRAs can also be offered through businesses for employee contributions. Understanding the distinctions among these accounts is crucial for effective personal financial planning and retirement savings. They all serve the purpose of helping individuals save for retirement but differ in terms of tax implications, contribution limits, and whether they are individually managed or employer-sponsored.