Question

which of the following best describes the tax advantage of a qualified retirement plan? a. employer contributions are tax deductible, as long as employee earnings are considered taxable income. b. the earnings in a qualified plan accumulate tax deferred. c. employer contributions are taxed as income to the employee. d. distributions prior to age 59½ are tax deductible.

Explanation:

One of the main tax - advantages of a qualified retirement plan is that the earnings within the plan accumulate on a tax - deferred basis. Employer contributions are often tax - deductible for the employer and not immediately taxable to the employee. Distributions prior to age 59½ are usually subject to taxes and penalties, not tax - deductible.

Answer:

B. The earnings in a qualified plan accumulate tax deferred.