Raj has personal investment plans for retirement.He also is involved with his company's retirement plan; his company contributes to his retirement each month.His personal contributions are ________,and his company's contributions are ________.
A) tax-free / tax-deferred
B) tax-deferred / tax-deferred
C) tax-deferred / tax-free
D) tax-free / tax-free

Question

Quizplus · Accepted Answer

Personal contributions to a retirement plan are typically tax-deferred, meaning they are not taxed until they are withdrawn in retirement. Meanwhile, employer contributions can be taxed in two ways: either tax-deferred like personal contributions, or tax-free if they are contributed to a Roth 401(k) or Roth IRA. However, since the question does not specify the type of retirement plan or the tax treatment of the employer contributions, the best answer is C, which covers the most common scenario of tax-deferred personal contributions and tax-free employer contributions.

Raj Has Personal Investment Plans for Retirement