Qualified retirement plan several

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The Warm Brew coffee company established a qualified retirement plan several years ago. The plan elected to provide for pre-tax contributions only. Participation has been very good, and each year more than three quarters of the company's employees contribute to the plan, and no employee has taken a distribution or loan. Plan assets are held in various participant-directed investments, all mutual funds, with a nationally recognized financial services firm. Who will be subject to taxation on deferred income and plan investment earnings when the participating employees and sponsoring company file their prior year tax returns?

  1. Employees will pay tax on deferred income
  2. Employer will pay tax on deferred income
  3. Employees will pay tax on plan earnings
  4. Employer will pay tax on plan earnings

Reference no: EM133072061

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