Ross Works for Houston Corporation,which Has a Contributory Defined Contribution

question 22

Multiple Choice

Ross works for Houston Corporation,which has a contributory defined contribution pension plan.The employer's monthly contribution to the plan is 8 percent of each participating employee's monthly salary,while the employee contributes only 6 percent.Which of the following statements best describes the benefits of the plan?

• A)Houston receives a deduction for its contributions to the plan when Ross receives a distribution from the plan.
• B)While Ross is taxed on the employer's contributions to the plan,his own contributions are not taxed until he receives a distribution from the plan.
• C)Ross may deduct his own contributions to the pension plan,and Ross reports income from the plan each year until he receives distributions from the plan.
• D)The amounts contributed to the plan and the earnings on those contributions are not taxed to Ross until he retires or receives a distribution from the plan.

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Definitions:

P-value Method

A statistical approach used to determine the significance of results in hypothesis testing, indicating the probability of observing data as extreme as the sample data.

Null Hypothesis

It is a hypothesis that assumes no significant difference or effect; it is the statement tested in statistical hypothesis testing to determine the likelihood of the observed data.

Statistically Significant

A determination that the observed difference or relationship in a statistic is not likely due to chance alone, according to a pre-specified threshold of significance.

Confidence Interval

A range of values derived from sample statistics that is likely to contain the true value of an unknown population parameter.