All of the Following Statements About 403(b)plans Are True EXCEPT

question 8

Multiple Choice

All of the following statements about 403(b) plans are true EXCEPT

• A)Contributions to a 403(b)reduce an employee's taxable income.
• B)403(b)plans are designed for employees of public school systems and tax-exempt organizations.
• C)The law limits the amount of income that an employee can elect to defer under a 403(b)plan.
• D)Matching employer contributions are not permitted under a 403(b)plan.

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Definitions:

Capital Lease

A lease arrangement that transfers substantially all the risks and rewards of ownership of an asset to the lessee, essentially treated as a purchase.

Retained Earnings

The portion of net earnings not paid out as dividends but instead reinvested in the company or used to pay off debt.

Deferred Income Taxes

Taxes applicable on income that is recognized in financial statements in one period but is taxable in another period.

Income Taxes Payable

Income taxes payable is a liability account on a company's balance sheet representing the amount of income taxes that the company owes to the government but has not yet paid.