A Primary Benefit of 401(k)plans Is That Payments Made by Employees

question 60

True/False

A primary benefit of 401(k)plans is that payments made by employees into the plan are pretax, so the employee pays no tax on those dollars until after he or she retires or withdraws the money.

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Definitions:

Current Assets

Resources anticipated to be transformed into cash, disposed of, or utilized within a year or during the normal operating cycle of a company.

Financial Leverage

The use of borrowed funds to increase potential return on investment.

Operating Cash Flows

The cash generated from the normal operations of a business, including the production and sale of goods or services.

Marketability

The ease with which an asset can be bought or sold in the market without affecting its price.