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Benefits Beginner: Introduction to 401(k) Plans

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1.
Which of the following 401(k) distributions may incur a penalty if taken prior to age 59½?
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Paying for rent. Paying for rent is not one of the allowed hardship exceptions.
2.
If you do a 401(k) rollover by removing and depositing the money yourself, you will be required to withhold some of the funds for taxes.
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True. You must withhold 20% for taxes.
3.
Who may deduct 401(k) contributions on their income tax returns?
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Employers. Only the employers may deduct contributions to a 401(k) plan--employee contributions are not reported as taxable income when deducted.
4.
Which type of 401k was designed for self-employed businesspeople with no employees?
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Solo 401k. The solo was designed for business owners with no employees.
5.
If your employer matches your contributions to your Roth 401(k), those employer contributions are _______.
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Pre-tax. Despite the Roth 401(k)'s purpose, these matches are actually pre-tax; but when you withdraw them, they will be taxed.
6.
There are situations in which a 401(k) rollover may result in you having to pay taxes.
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True. If you don't roll over all of it, or if you don't place the funds into the new account within 60 days, you can be taxed on the amount that is not rolled over.
7.
If an employee defers 8 percent of his or her wages into a 401(k) plan, and the employer contributes an additional 3 percent, the employer is making a matching contribution.
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True. The employer is making a matching contribution.