Which of the following statements about 401(k)plans are true?
I. They are defined benefit plans.
II. They allow employer and employee contributions.
III. Earnings accrue tax-free during the employee's working years.
IV. They allow employee discretion in asset allocation.
V. They always have minimum guaranteed rates of return.

Question

Quizplus · Accepted Answer

401(k) plans are defined contribution plans, not defined benefit plans. They allow both employer and employee contributions, earnings accrue tax-free until withdrawal, and employees typically have discretion in asset allocation. They do not guarantee minimum rates of return.

Which of the Following Statements About 401(k)plans Are True