Question

Which of these statements regarding Section 403(b)/tax-sheltered annuity (TSA) plan employee elective deferrals is CORRECT?

A) 403(b) plans are exempt from the universal availability requirements.
B) Employer contributions are subject to FICA (Social Security and Medicare) and federal unemployment (FUTA) payroll taxes.
C) 403(b) plans exempt the employer from responsibility for investment choices provided by the plan, plan administration, and regulatory compliance.
D) Employee elective deferrals are subject to FICA (Social Security and Medicare) and FUTA (federal unemployment) payroll taxes.

Answer 1

D)Employee elective deferrals to a 403(b) plan are subject to FICA and FUTA payroll taxes.

Step-by-step explanation:

The correct statement regarding Section 403(b)/tax-sheltered annuity (TSA) plan employee elective deferrals is:

D) Employee elective deferrals are subject to FICA (Social Security and Medicare) and FUTA (federal unemployment) payroll taxes.

Employee elective deferrals made to a 403(b) plan are considered part of the employee's taxable income and are subject to FICA taxes, which include Social Security and Medicare taxes, as well as FUTA payroll taxes.