Final answer:
In a 401(k) plan, non-elective contributions are not mandatory, making option (a) incorrect. Matching contributions are not required for plan qualification (option c is correct), and the contribution limits for 401(k) plans are higher than those for ordinary profit-sharing plans (option d is correct).
Step-by-step explanation:
In a 401(k) plan, non-elective contributions are not mandatory; they are employer contributions that are made regardless of whether the employee contributes to the plan. Option (a) is therefore incorrect. Voluntary, nondeductible contributions refer to contributions made with after-tax dollars, and these are not necessarily limited to a prohibited group, making option (b) incorrect.
These retirement savings vehicles like 401(k)s and Individual Retirement Accounts (IRAs) are advantageous because they often contain tax-deferred status, meaning taxes on the contributions and any investment growth are not paid until the funds are withdrawn, typically at retirement. The 401(k) is especially beneficial as it is portable when an employee moves to a new employer.