Which of the Following Statements Concerning Nonqualified Deferred Compensation Plans

question 13

Multiple Choice

Which of the following statements concerning nonqualified deferred compensation plans is true?

• A) These plans can be an important tax planning tool for employers if they expect their marginal tax rate to decrease over time.
• B) These plans can be an important tax planning tool for employees who expect their marginal tax rate to increase over time.
• C) Distributions are taxed at the same tax rate as long-term capital gains.
• D) If an employer doesn't have the funds to pay the employee, the employee becomes an unsecured creditor of the employer.

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Definitions:

Buying Habits

Patterns or tendencies consumers exhibit when purchasing goods or services, including frequency, timing, and preference.

Direct Disposal Costs

Costs directly associated with the disposal of a fixed asset, including costs to remove, dismantle, and transport the asset.

Lower of Cost

A valuation rule often used in inventory accounting to record the cost of inventory at the lower of its original cost or its current market value.

Market Method

The market method is an approach to valuing certain assets based on the current market prices of similar assets.