When employees contribute to a traditional 401(k)plan, they _____ allowed to deduct the contributions and they ______ taxed on distributions from the plan.

Question

Quizplus · Accepted Answer

With traditional 401(k) plans, employees are allowed to deduct their contributions from their taxable income, reducing their tax liability in the year they make the contribution. However, they will be taxed on any distributions they take from the plan in retirement. So, they are allowed to deduct the contributions and are taxed on distributions, making option B the correct answer.

When Employees Contribute to a Traditional 401(k)plan, They _____ Allowed