Which of the Following Statements Comparing Qualified Defined Contribution Plans

question 8

Multiple Choice

Which of the following statements comparing qualified defined contribution plans and nonqualified deferred compensation plans is false?

• A) In terms of tax consequences to the employee, earnings on qualified plans (except Roth plans) are deferred until distributed to the employee but earnings on nonqualified plans are immediately taxable.
• B) Distributions from both types of plans are taxed at ordinary income tax rates.
• C) Qualified defined contribution plans are subject to formal vesting requirements while nonqualified deferred compensation plans are not.
• D) Employers must fund qualified defined contribution plans but not nonqualified deferred compensation plans.

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Definitions:

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A normative model of decision making in which the decision maker weighs the personal importance and probabilities of different outcomes in choosing among alternatives in order to maximize overall satisfaction of personal goals.