Question

Which of the following is true about 401(k) plans? Select all that apply. (1 point) Responses money is set aside for retirement after tax deductions money is set aside for retirement after tax deductions money is set aside for retirement before tax deductions money is set aside for retirement before tax deductions all employers match employee contributions all employers match employee contributions some employers match employee contributions some employers match employee contributions money is deposited directly into the employee’s checking account

Answer 1

Here are the statements that are true about 401(k) plans:

1. Money is set aside for retirement before tax deductions - This is true for traditional 401(k) plans, where contributions are made before tax is deducted.

2. Some employers match employee contributions - This is also true, as many employers offer matching contributions to incentivize retirement savings, but not all do.

The following statements are not true:

• Money is set aside for retirement after tax deductions - This would describe a Roth 401(k), which is an option under 401(k) plans, but not all 401(k) plans fall under this category.

• All employers match employee contributions - This is not true, as matching contributions vary by employer.

• Money is deposited directly into the employee’s checking account - This is not correct; contributions are made to a retirement account, not directly to a checking account.

So the correct responses are:

• Money is set aside for retirement before tax deductions
• Some employers match employee contributions