Question

Assuming that Nick is most interested in implementing a retirement plan that offers flexibility, low costs, and limited paperwork and regulation, he should consider establishing a:

a.Cash balance plan

b.401(k) plan

c.Roth 401(k) plan

d.SIMPLE plan

e.Stock bonus plan

Answer 1

Answer is c. Roth 401(k) plan

Explanation:

The advantage that the Roth 401(k) plan brings forth to the contributor is that it allows for penalty-free withdrawal of the contributions and this is both proving the cost effectiveness and the limited regulations.

Also, one noted advantage of the Roth 401(k) plan is that it allows for the flexibility in terms of conversion. Lets say, in the case of conversion from the traditional IRA into Roth IRA which will make your money to stay in the Roth IRA untouched for as long as you would prefer it to last. Also, the flexibility of the Roth IRA being that you are able to contribute to the Roth IRA regardless of your age. This is unlike other plans which gives limits.