Why Are 401(k) Retirement Plans Often Better Than Saving Money

question 13

Multiple Choice

Why are 401(k) retirement plans often better than saving money in a bank account?

• A) You don't pay taxes on the money you contribute or interest you earn until you draw the money out after age 59 1/2
• B) Employers have to match the amount you contribute each year.
• C) The money you put into the plan earns more interest than what banks pay.
• D) All of the above.

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Definitions:

Target Costing

A pricing strategy in which the selling price and profit margin are used to determine the maximum cost that can be incurred on a product, with the aim of ensuring competitiveness and profitability.

Target Profit

The specific net income a business intends to reach within a designated timeframe.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Target Costing

A pricing method that involves determining a product's selling price and then subtracting desired profit to arrive at a target production cost.