Under a qualified pension plan
I.The yearly earnings on the pension plan assets are taxable income to the employee.
II.An employer's contribution is not taxable income to the employee at the time of the contribution.

A)Only I is correct.
B)Only II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Under a qualified pension plan
I.The yearly earnings on the pension plan assets are taxable income to the employee.
II.An employer's contribution is not taxable income to the employee at the time of the contribution.
​
A)Only I is correct.
B)Only II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Only statement II is correct. An employer's contribution is not taxable income to the employee at the time of the contribution. However, the yearly earnings on the pension plan assets are not taxable income to the employee until they are withdrawn from the plan. This is the tax-deferred feature of a qualified pension plan.

Under a Qualified Pension Plan