Question

Why would a Roth 401(k) investment plan allow you to invest the most amount of money?
a.
The federal government subsidizes a portion of a Roth 401(k) to help people in lower tax brackets save for retirement.
b.
Roth 401(k) plans are reserved for administrators and executives, who have a higher income which would allow them to invest more.
c.
A Roth 401(k) plan takes money after tax has been removed from gross income, and has a contribution limit, but withdrawal is tax free.
d.
The contribution limit of a Roth 401(k) plan is more than double the limit of the traditional 401(k).


Please select the best answer from the choices provided

A
B
C
D

Answer 1

C

A Roth 401(k) uses after‑tax contributions (so withdrawals in retirement are generally tax‑free). The description in (c) is accurate; the other choices are incorrect.