Which of the following statements is true of employees who choose the Roth version of employee payroll-deduction retirement plans?
A) Their incomes are tax deductible, and the earnings on these investments are tax deferred.
B) They pay taxes on the income they contribute, but earnings on these contributions are tax exempt.
C) They must pay taxes on funds distributed from their fund when they make withdrawals.
D) Their incomes are tax-free, but withdrawals are subject to state taxes.

Question

Quizplus · Accepted Answer

In a Roth retirement plan, contributions are made with after-tax dollars, meaning taxes are paid upfront. However, the earnings and withdrawals are tax-free, provided certain conditions are met.

Which of the Following Statements Is True of Employees Who