The Primary Purpose of a 401(k) Plan Is To

question 5

Multiple Choice

The primary purpose of a 401(k) plan is to:

• A) save for retirement on a tax-deferred basis
• B) save for retirement on a tax-free basis
• C) save for retirement and have your employer match your contributions, all on a tax-free basis
• D) have a forced savings plan for emergencies

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Definitions:

Scarcity

A situation in which resources or goods are limited in availability, leading to increased value and demand.

Psychological Principle

Fundamental concepts or assumptions in psychology that explain behaviors, thoughts, and emotions.

Communications Model

A theoretical framework that describes the process of transferring information from a sender to a receiver through a medium.

Elements

Fundamental components or aspects that form the basic parts of a whole system, concept, or substance.