The primary purpose of a 401(k) plan is to:

Question

Quizplus · Accepted Answer

The primary purpose of a 401(k) plan is to save for retirement on a tax-deferred basis. This means that the money you contribute to the plan is not taxed until you withdraw it, allowing you to save more over time by delaying taxes. Some employers may also offer matching contributions, but the main purpose is to save for retirement. Option B is incorrect because there are no 401(k) plans that allow for tax-free contributions. Option C is partially correct, as some employers do offer matching contributions, but the contributions and earnings are still subject to taxation when withdrawn. Option D is incorrect, as a 401(k) plan is not designed for emergency savings.

The Primary Purpose of a 401(k) Plan Is To