Question

All of the following plans allow for employee contributions to be taken on a pre-tax basis EXCEPT: A. Traditional 401(k)

B. Roth 401(k)
C. SIMPLE IRA
D. Health Savings Account (HSA)

Answer 1

B. Roth 401(k)

Among the given plans, the Roth 401(k) is the one in which employee contributions are made with after-tax dollars and are not taken on a pre-tax basis.

Step-by-step explanation:

The plan that allows employee contributions to be taken on a pre-tax basis except for one is key to understanding the options provided. Of the options given:

• A. Traditional 401(k) - Contributions are made pre-tax, reducing taxable income.
• B. Roth 401(k) - Contributions are made with after-tax dollars, so taxes are paid upfront rather than at withdrawal.
• C. SIMPLE IRA - Like traditional 401(k)s, contributions to a SIMPLE IRA are pre-tax.
• D. Health Savings Account (HSA) - Contributions can also be made pre-tax to an HSA.

Given these descriptions, the Roth 401(k) is the plan where employee contributions are not taken on a pre-tax basis; instead, they are contributed after taxes have been applied to the income.