Final answer:
The assertion that Hope's contribution to her retirement plan is a post-tax contribution may be false if she participates in tax-deferred plans like a 401(k) or 403(b), where contributions are made pre-tax. Roth accounts differ with post-tax contributions. Understanding the distinction between pre-tax and post-tax is essential for retirement planning.
Step-by-step explanation:
The statement that Hope's contribution to her retirement plan is a post-tax contribution on which she pays federal income taxes may be false if Hope is contributing to a tax-deferred retirement plan such as a 401(k) or 403(b). In these defined contribution plans, employee contributions are made with pre-tax dollars, which means they do not pay federal income taxes on the money at the time of contribution. Instead, the funds grow tax-deferred, and taxes are paid upon withdrawal in retirement.
However, if Hope's contributions were to a Roth 401(k) or Roth 403(b), for example, those would be made with post-tax dollars and would not be taxed upon withdrawal. It's also important to consider whether Hope is taking any deductions or credits that may apply to retirement savings if she were making post-tax contributions to an individual retirement account (IRA).
In the context of retirement savings, many workers in the United States utilize these types of plans to save for retirement efficiently, leveraging the benefit of compound interest and tax advantages to secure their financial future. The contrast between pre-tax and post-tax contributions is a crucial concept in understanding how retirement plans can affect one's taxes both now and in the future.