All of the following are characteristic of 401(k)plans EXCEPT ________.
A)categorized as a defined contribution plan
B)deduction replaces Social Security tax
C)pretax salary deductions invested
D)considered a savings and thrift plan

Question

Quizplus · Accepted Answer

B)A 401(k)plan is a defined contribution plan and a savings and thrift plan. Employees invest by making pretax salary deductions, and the plans are usually administered by investment firms. A 401(k)contribution does not replace the Social Security tax.

All of the Following Are Characteristic of 401(k)plans EXCEPT ________