Because of income tax considerations,it makes sense to own high current-return investments in a 401(k)plan and high future-return investments outside the plan.

Question

Quizplus · Accepted Answer

This statement is true because high current-return investments will generate immediate income that is sheltered from taxes within a 401(k) plan. On the other hand, high future-return investments may generate capital gains that are taxed at a lower rate when held outside of a tax-advantaged account. Therefore, it can be advantageous to strategically allocate investments based on the tax implications.

Because of Income Tax Considerations,it Makes Sense to Own High