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1. Which of the following is considered to be an advantage of the 401k plan, according to the textbook?
a. minimal expense to the employer
b. no annual contribution required
c. owner employees MAY contribute
d. all of the above
2. Which of the following business types are allowed to establish a 401k?
c. Sole Proprietors
d. All of the above
3. What amount of an employee's wage is subject to Medicare Tax?
a. the full amount of wages earned
b. only 6.2% of wages earned
c. only the wage base of $137,700
d. none of these answers are correct
4. The catch up provision allows an employees who is over a certain age to contribute an extra how much to their 401k?
b. $ 5,500
5. True or False, an employer who is contributing to a 401k plan for their employees, can elect to withold their employees salary deferral until they're ready to invest it?
Q1) D) all of the above
Explanation: All the points mentioned above are the advantages of 401(k) plan
Q2) D) all of the above
Explanation: all the business types mentioned, can opt for 401 k plan
Q3) D) none of these answers are correct
Explanation: Medicare taxable wage refers to the employee wages on which Medicare tax is paid. It is calculated as the employee’s gross earnings less the non-taxable items, without any maximum on gross wages. Employers are required to withhold 1.45% of employee’s Medicare wages as Medicare tax and submit a matching amount to cover the costs of the Medicare program.
Q4) D) 6,500
Explanation: People above the age of 50 or older can make an additional deposit of $6,500
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