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:

Statistical Inference

The process of using data analysis to deduce properties of an underlying distribution of probability.

Extrapolation

The process of estimating unknown values by extending or projecting from known data.

Probability Sampling

A sampling method that hives every individual in the population an equal chance of being selected for the sample.

Concepts

Fundamental ideas or theories that form the basis of knowledge in a particular discipline or are used to guide actions and decisions.