Which of the Following Statements Concerning Nonqualified Deferred Compensation Plans

question 40

Multiple Choice

Which of the following statements concerning nonqualified deferred compensation plans is true?

• A)If an employer doesn't have the funds to pay the employee,the employee becomes an unsecured creditor of the employer.
• B)These plans can be an important tax planning tool for employers if they expect their marginal tax rate to decrease over time.
• C)These plans can be an important tax planning tool for employees who expect their marginal tax rate to increase over time.
• D)Distributions are taxed at the same tax rate as long-term capital gains.

---

Definitions:

Monthly Payment

A regularly scheduled payment, typically used in the context of loans, that is made every month.

Interest

The cost of borrowing money, typically expressed as a percentage of the principal, paid by borrowers to lenders as a fee for the use of the borrowed funds.

Withdrawal Annually

The act of taking out money from an account, fund, or plan once every year, often applied in the context of retirement savings or investment accounts.

Annual Interest

The amount of interest due over the course of a year on a loan or investment, calculated as a percentage of the principal.