What is a 401(k)?A.A retirement plan sponsored by a company to which employees can contribute part of their wagesB.A certificate issued by a bank to a person who has deposited money for a specific amount of timeC.A retirement fund that is designed for self-employed and other individualsD.A federal program that provides retirement income for the elderly and people with disabilitiesSUBMITarrow_backPREVIOUS

What is the purpose of a 401(k) plan in retirement planning?Question 4AnswerA.To invest in high-risk assetsB.To provide life insurance coverageC.To offer short-term investment optionsD.To facilitate retirement savings through employer-sponsored plans

Many companies offer a 401(k) plan for employees’ retirement. Participants authorize a certain percentage of their before-tax salary to be deducted from their paycheck and put into a 401(k). By putting a percentage of your salary into a tax-deferred 401(k), you reduce the amount of pay subject to federal and state income tax. In addition, your employer may match a portion of every dollar you invest in the 401(k), up to acertain percentage or dollar amount.Group of answer choicesTrueFalse

Under a 401(k) plan, your employer makes nontaxable contributions to the plan for your benefit and reduces your salary by the same amounts.Group of answer choicesTrueFalse

What is the main benefit of investing in a 401k, IRA, or other retirement account?Multiple ChoiceThe employee receives additional tax deductions yearly.The earnings are tax free once withdrawn.These accounts always end up being worth more than the initial contributions.The employer matches the employee’s contributions.The earnings grow without being taxed yearly.

How are IRAs different from 401(k) plans?A.IRAs are set up by employers.B.IRAs are defined-benefit plans.C.IRAs are defined-contribution plans.D.IRAs are set up by individuals.SUBMITarrow_backPREVIOUS