1. What are the tax advantages common to all types of tax-advantaged retirement savings plans?
Answer: Employers receive a tax deduction for contributions that they make to tax-advantaged retirement plans. At the same time, employees will not recognize taxable income until the benefits are distributed to them. It is presumed that the benefits will not be distributed until retirement. You will learn in Chapter 23 that tax-advantage retirement plans can usually be rolled over into an individual retirement account (IRA), which will further delay taxation.
2. Do tax-advantaged plans need to invest in tax-favorable investments to remain tax-advantaged?
Answer: There are certain investment prohibitions that you will ...