Which of the following is a tax consequence associated with a cash or deferred a

ID: 2589893 • Letter: W

Question

Which of the following is a tax consequence associated with a cash or deferred arrangement, also known as a 401(k):

A. Contributions within limits are not included in the employee's income and are immediately vested.

B. The maximum contribution is $17,500 for an employee who is 35 years of age and whose annual compensation is $65,000.

C. Employer contributions are not tax deferred.

D. Two of the above.

A. Contributions within limits are not included in the employee's income and are immediately vested.

B. The maximum contribution is $17,500 for an employee who is 35 years of age and whose annual compensation is $65,000.

C. Employer contributions are not tax deferred.

D. Two of the above.

Answer is:

D. Two of the above.

Contributions within limits are not included in the employee's income and are immediately vested and Employer contributions are not tax deferred.

D. Two of the above.

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