Which of the Following Statements About Roth 401(k)plans Is True

question 4

Multiple Choice

Which of the following statements about Roth 401(k) plans is true?
I.Contributions to a Roth 401(k) plan are made with before-tax dollars.
II.Qualified distributions from a Roth 401(k) are received income-tax free.

• A)I only
• B)II only
• C)both I and II
• D)neither I nor II

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Definitions:

Consumption

The usage of goods and services by households, including the actions of selecting, purchasing, using, and disposing of products.

Double Taxation

The levy of tax by two or more jurisdictions on the same declared income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes).

Tax Base

The assessed value of all taxable income, property, assets, or other items that a government can tax.

Income Tax

A tax levied by governments on individuals or entities based on their income or profits.