Which of the Following Statements Comparing Qualified Defined Contribution Plans

question 33

Multiple Choice

Which of the following statements comparing qualified defined contribution plans and nonqualified deferred compensation plans is false?

• A)Employers must fund qualified defined contribution plans but not nonqualified deferred compensation plans.
• B)Qualified defined contribution plans are subject to formal vesting requirements while nonqualified deferred compensation plans are not.
• C)Distributions from both types of plans are taxed at ordinary income tax rates.
• D)In terms of tax consequences to the employee,earnings on qualified plans (except Roth plans) are deferred until distributed to the employee but earnings on nonqualified plans are immediately taxable.Employees are not taxed on nonqualified deferred compensation plans until they receive distributions from the plans.

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Definitions:

Motivator Factors

Elements that significantly increase employee satisfaction and motivation, often related to job content such as recognition and achievements.

Job Content

Pertains to the duties, responsibilities, and tasks that make up a specific job or position.

Achievement

The successful attainment of goals or objectives, typically by effort, skill, or courage.

Job Dissatisfaction

A negative emotional response towards one's job, resulting from a perceived gap between expectations and reality of the job.