Which of the Following Statements Is Incorrect

question 8

Multiple Choice

Which of the following statements is incorrect?

• A)Tax-deferred plans have an accumulation period and a distribution period.
• B)Normally,if a retirement plan is funded with dollars that have already been taxed,the distributions will be taxed.
• C)Contributions to retirement plans are often limited in amount.
• D)During the accumulation period of a qualified retirement plan no taxes are due on the earnings from the plan investments.

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Definitions:

Taxable Event

A financial transaction that may result in taxes owing to the government.

Short-term Capital Gain

A profit realized from the sale of an asset held for less than a year, often taxed at a different rate than long-term capital gains.

Long-term Capital Gain

Profit from the sale of an asset held for more than a year, typically subject to a lower tax rate.

Mutual Fund Prospectus

A legal document provided by mutual funds to potential investors, detailing the fund's objectives, risks, performance, and expenses.