Author Question: JKL Company just converted its traditional defined-benefit plan to another type of plan. Under ... (Read 115 times)

plus1 · **on:** Jul 11, 2018

JKL Company just converted its traditional defined-benefit plan to another type of plan.

Under the plan, benefits are defined in terms of a hypothetical account balance, with retirement benefits dependent upon the value of the participant's account at retirement. Each year, employees receive an interest rate credit and a pay credit which is a specified percentage of compensation. This type of plan is called a
A) section 401(k) plan.
B) deposit-administration plan.
C) cash-balance plan.
D) trust fund plan.

Question 2

All the following statements concerning a Roth 401(k) plan are true EXCEPT

A) After-tax dollars are used to fund the plan.
B) Investment earnings accumulate on a tax-free basis.
C) Employees at all income levels may contribute to the plan, but annual contributions are limited.
D) Qualified distributions at retirement are fully taxable.