Many of the postretirement health benefit plans offered by companies to their employees are unfunded, while all of their pension plans have some degree of funding. Which of the following statements is false?
A)There is no legal requirement to fund postretirement health benefits, but there are legal requirements covering pension funding.
B)Contributions to pension plans are normally tax deductible, but contributions to postretirement health plans are not tax deductible.
C)Funds contributed to a pension plan can be withdrawn at any time, but funds contributed to a postretirement health plan cannot be withdrawn by law.
D)Taxes do not have to be paid on investment income earned by assets in pension plan, but they do normally have to be paid on postretirement health plans.

Question

Quizplus · Accepted Answer

Funds contributed to a pension plan cannot be withdrawn at any time without penalty, and there are legal restrictions on when and how withdrawals can be made. Similarly, funds contributed to a postretirement health plan may be subject to legal restrictions on when and how they can be used, but they can generally be withdrawn at any time without penalty. The other statements are true: there is no legal requirement to fund postretirement health benefits, contributions to pension plans are normally tax deductible, contributions to postretirement health plans are not tax deductible, and taxes may need to be paid on investment income earned by assets in postretirement health plans.

Many of the Postretirement Health Benefit Plans Offered by Companies