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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