Question

Spencer has a retirement account through his employer. His monthly contributions to the account are taken out of his check before payroll taxes are calculated.
The fact that his employer sponsors his benefit package, and the contributions are , indicates that Spencer’s retirement account is a .

Answer 1

Answer:

Traditional 401 (K) plan

Step-by-step explanation:

The fact that the contributions to the pension plan are deducted before payroll taxes means that the plan in question is a traditional 401 (K) plan with taxes on the earnings deferred until the employee eventually withdraws funds from the pension plan.

This is quite different from Roth  401 (K) Plan where the contribution is not tax deferred ,instead contributions are made after payroll taxes have been sorted but eventual withdrawal from the plan is tax exempt.