Question

In a qualified plan, if the employer makes all of the contributions, the employee's cost basis is: A)the value of the contributions. B)zero. C)the increase in value only. D)one-half of the contributions made.

Answer 1

In a qualified plan, if the employer makes all of the contributions, the employee's cost basis is zero. Thus, the correct option is B) zero.

Step-by-step explanation:

In a qualified plan, if the employer makes all of the contributions, the employee's cost basis is B) zero.

A qualified plan is a retirement plan that meets certain requirements set by the Internal Revenue Service (IRS). In this type of plan, the employer contributes to the employee's retirement account.

The employee's cost basis is the amount of money that the employee has invested in the plan, including any contributions made by the employee themselves.

However, if the employer makes all of the contributions, the employee's cost basis is considered to be zero.