U.S.tax laws encourage companies to overfund their pension plans.

Question

Quizplus · Accepted Answer

The U.S. tax laws provide incentives for companies to overfund their pension plans, which allows them to receive tax deductions for contributions made to the plan and to accumulate tax-free earnings in the plan. Additionally, overfunding the pension plan can also serve as a form of corporate finance, allowing the company to invest excess funds in the plan and earn higher returns than they would otherwise be able to through traditional investment vehicles.

U.S.tax Laws Encourage Companies to Overfund Their Pension Plans