Attractive features of a 401(k)plan can include:

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Quizplus · Accepted Answer

The best choice is D because it includes both matching contributions and tax deferral, which are both highly attractive features of a 401(k) plan. Matching contributions help to boost an employee's retirement savings, while tax deferral allows the employee to postpone paying taxes on the income contributed to the plan, helping to lower their taxable income in the present. Option C includes liquidity, which may be a desirable feature but isn't unique to 401(k) plans and is secondary to the financial benefits of matching contributions and tax deferral. Option A includes a guaranteed investment return, which is not a feature of 401(k) plans as investment returns are subject to market fluctuations. Option B includes only tax deferral, leaving out the significant benefit of employer matching contributions. Option E includes only liquidity, without including either tax deferral or matching contributions.

Attractive Features of a 401(k)plan Can Include