Question

question 10 of 10
which statement about 401(k) plans is true?
a. employees can contribute an unlimited amount of income to 401(k) plans.
b. employees are not allowed to make contributions to 401(k) plans.
c. 401(k) plans are sponsored by employers.
d. 401(k) plans provide only one option for investment.

Explanation:

• Option A: There are contribution limits set by the IRS for 401(k) plans. So, employees cannot contribute an unlimited amount.
• Option B: Employees are allowed to make contributions to 401(k) plans.
• Option C: 401(k) plans are employer - sponsored retirement savings plans. Employers set up these plans for their employees.
• Option D: 401(k) plans typically offer multiple investment options such as stocks, bonds, mutual funds etc.

Answer:

C. 401(k) plans are sponsored by employers.