Which of the Following Statements Comparing Qualified Defined Contribution Plans

question 84

Multiple Choice

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

• A)Employers must fund qualified defined contribution plans but not nonqualified deferred compensation plans.
• B)Qualified defined contribution plans are subject to formal vesting requirements while nonqualified deferred compensation plans are not.
• C)Distributions from both types of plans are taxed at ordinary income tax rates.
• D)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.

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Definitions:

Balance Brought Forward

The opening balance of an account that is carried over from the end of a previous period.

Check Amount

Check Amount refers to the specific monetary value written and payable on a check, representing the total to be transferred from the account of the drawer to the payee.

Balance Carried Forward

The amount of money carried from one period to the next in a financial statement or accounting ledger.

Check Stub

The part of a check that is retained as a record, detailing the amount paid, to whom, and for what purpose.