Which of the following statements is true regarding employer-provided qualified retirement plans?
A)May discriminate against rank-and-file employees.
B)Deductible contributions are generally phased-out based on AGI.
C)Executives are generally ineligible to participate in these plans.
D)They are generally referred to as defined benefit plans or defined contribution plans.

Question

Quizplus · Accepted Answer

Employer-provided qualified retirement plans are generally referred to as either defined benefit plans (where the employer promises to provide a certain benefit upon retirement) or defined contribution plans (where the employer and/or employee contribute to an individual account, such as a 401(k), and the benefit is determined based on the contributions and investment returns). Option A is incorrect because qualified retirement plans are subject to nondiscrimination testing and cannot discriminate against rank-and-file employees. Option B is incorrect because deductible contributions to qualified retirement plans are subject to specific contribution limits rather than phase-outs based on AGI. Option C is incorrect because executives are generally eligible to participate in qualified retirement plans, but there may be certain limitations on the level of contributions they can make or the benefits they can receive.

Which of the Following Statements Is True Regarding Employer-Provided Qualified