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DEVON COOMBS
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Exams
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Personal Finance & FIRE
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Retirement Accounts & Tax Strategy
Test 1 Practice
Test 1
100
Test 2 Practice
Test 2
130
Test 3 Practice
Test 3
120
Options & Derivatives
Test 4
40
Capital Structure Theory
Test 5
40
Working Capital Management
Test 6
20
Personal Finance & FIRE
Test 7
50
Chapters
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1/10
Easy
What is the fundamental tax difference between a Traditional 401(k) and a Roth 401(k)?
Tip: Right-click (or long-press) an option to cross it out.
A
Traditional contributions are made with pre-tax dollars resulting in taxable withdrawals; Roth contributions are made with post-tax dollars resulting in tax-free withdrawals.
B
Traditional contributions grow tax-free but withdrawal principal is taxed; Roth contributions are taxed annually on dividend yield.
C
Traditional 401(k)s are only available to employees of non-profits; Roths are strictly for corporate employees.
D
Traditional plans are exempt from Required Minimum Distributions (RMDs); Roth plans enforce strict RMDs at age 73.
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