Question #111312
Which of the following statements is false regarding an employee's contribution into a 401(k) tax deferred retirement account?
a.The employee's contributions are not subject to FICA tax.
b.Upon retirement, the employee will receive their contributions back in the form of regular payments.
c.None of these statements are correct.
a.The employee's contributions are not subject to FICA tax.
b.Upon retirement, the employee will receive their contributions back in the form of regular payments.
c.None of these statements are correct.
Expert's answer
The correct answer is b, the reason being that the employee can withdraw the entire account in one lump sum. However, by doing this, the employee will face a high tax bracket for the year.
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