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In Business / College | 2025-07-07

Select all the reasons most planners advise people to contribute as much as possible to a Keogh or 401(k) plan.

A. Contributions reduce adjusted gross income and therefore reduce taxes.
B. Increased value accumulates on a tax-free basis until funds are withdrawn.
C. Early withdrawals are penalty free if spent on living expenses.
D. Withdrawals are tax free upon retirement.

Asked by calebmackattack

Answer (2)

Contributing to a Keogh or 401(k) plan can reduce taxable income and allows for tax-deferred growth. Early withdrawals typically incur penalties and are not tax-free upon retirement depending on the plan type. It's important to consider these factors when maximizing retirement savings. ;

Answered by GinnyAnswer | 2025-07-08

The correct reasons to contribute to a Keogh or 401(k) plan are that contributions reduce adjusted gross income and allow tax-free growth until withdrawal. Options C and D are generally misleading as early withdrawals usually incur penalties, and traditional plan withdrawals are not tax-free. Therefore, options A and B are the best responses.
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Answered by Anonymous | 2025-07-18

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