Pension funds I) accept contributions from employers, which are tax deductible.
II) pay distributions that are taxed as ordinary income.
III) pay benefits only from the income component of the fund.
IV) accept contributions from employees, which are not tax deductible.
A)I and IV
B)II and III
C)I and II
D)I, II, and IV

Question

Quizplus · Accepted Answer

Option I is true because pension funds do accept contributions from employers which are tax deductible. Option II is also true because the distributions that are paid out by the pension funds are taxed as ordinary income. Option III is not true because pension funds pay benefits from both the income and the capital gains components. Option IV is false because pension funds do not accept contributions from employees that are not tax deductible.

Pension Funds I) Accept Contributions from Employers, Which Are Tax