Final answer:
Employer contributions to defined contribution retirement plans such as 401(k)s are tax-deferred, which means they are not taxable to the employee when contributed, but upon withdrawal during retirement. Group Life Insurance contributions may be taxable if they exceed a certain amount. The correct option is c.
Step-by-step explanation:
The question asks about the type of plan in which the employer's contribution is taxable to the employee. The four options provided are a) Registered Pension Plan, b) Long-term Disability Insurance, c) Deferred Profit Sharing Plan, and d) Group Life Insurance.
To answer this question, we need to look at each option and understand how employer contributions are typically taxed.
Registered Pension Plans (RPPs) and 401(k)s or 403(b)s are types of defined contribution plans that are tax-deferred: employer contributions aren't taxed until the employee withdraws from the plan, typically during retirement. Long-term Disability Insurance premiums paid by the employer may be taxable if the employer also pays the benefit claims.
Deferred Profit Sharing Plans typically defer taxes on contributions until withdrawal as well. Group Life Insurance premiums paid by the employer for the benefit of the employee may be taxable if the coverage amount exceeds a certain threshold.
In general, employer contributions to a 401(k) or 403(b) are tax-deferred, meaning they are not taxable to the employee until withdrawal. The purpose of these plans is to provide a retirement savings vehicle where the money can grow tax-free until it is time for the employee to retire.
Pension insurance, like the payments to the Pension Benefit Guarantee Corporation, does not directly relate to employer contributions being taxable to employees. This insurance is to ensure that employees receive some pension benefits if their company goes bankrupt and cannot fulfill its pension promises. The correct option is c.