Question

the graphic shows a sample 401k investment.
sample 401(k) investment
annual contribution: $5,000
employer match: 5%
employer contribution: $2,500
total contribution: $7,500
based on the graphic, what advantage does this 401k have over other types of investments?
○ it encourages employees to contribute by offering an employer bonus.
○ it ensures that employees who contribute will retire with more money.
○ it guarantees employees a return on their investment because of a company match.
○ it incentivizes employees to contribute by offering an employer match.

Explanation:

• Option 1: An employer match is not a "bonus" in the typical sense; it's a match to employee contributions, so this is incorrect.
• Option 2: While contributing to a 401(k) can help with retirement savings, the graphic focuses on the employer match as an incentive, not the guarantee of more retirement money.
• Option 3: A company match does not guarantee a return on investment (market factors still affect returns), so this is incorrect.
• Option 4: The graphic shows an employer match (50% of the employee's $5,000 contribution, adding $2,500), which incentivizes employees to contribute because their contributions are matched by the employer.

Answer:

D. It incentivizes employees to contribute by offering an employer match.