Rick loves only half of his employees and hates the rest. He is considering offering a qualified retirement plan, but doesn’t want to give it to the employees he hates. As his financial advisor, you remind him:
Explanation
Answer: C - An employer that is considering offering qualified retirement plan should be reminded that employers are allowed an immediate tax deduction for amount they contribute and that employees will not have to pay income taxes on the amount they contribute to their savings. Additionally, earnings are tax-exempt, allowing for tax-free accumulation of income and gains on investments, there may be reduced income tax to lump sum distributions to certain participants, income taxes on certain types of distribution may be deferred by rolling over the distribution to IRA’s, and installment or annuity payments are taxed only when they are received.
