Question

If you work for a company and have a 401(k) retirement account, the account contains money you contributed to your retirement and money contributed by your employer. When you retire, which of the following will these payments be?

A. Welfare payments
B. Pension
C. Transfer payments
D. None of the above

Answer 1

The payments from a 401(k) retirement account when a person retires are the accumulated money that they and their employer have contributed.

Step-by-step explanation:

A 401(k) retirement account is a type of defined contribution retirement plan.

In a 401(k) plan, both the employee and the employer can contribute money to the account. The employee contributes a portion of their salary before taxes, while the employer may also make contributions on behalf of the employee.

When the employee retires, the payments from their 401(k) account will not be welfare payments, pensions, or transfer payments. Instead, they will be the accumulated money that the employee and the employer have contributed to the account, along with any investment returns on those contributions.