If a Section 401(k) Plan Allows an Employee to Choose

question 26

True/False

If a Section 401(k) plan allows an employee to choose between a direct payment of compensation in cash or a contribution to the retirement plan, the plan is not a "qualified" plan.

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Definitions:

Sole Proprietorship

A business structure where an individual owner operates the company and is personally responsible for its debts.

Personally Responsible

Taking ownership and accountability for one's actions and duties, being reliable in fulfilling obligations and commitments.

Injuries

Physical harm or damage to the body caused by accidents, falls, hits, weapons, or other external forces.

Federally Registered

A status indicating that a business, trademark, or other item has been officially recorded and recognized by a national government.