Fanny's employer has a qualified pension plan. The employer makes all payments into the plan; employees do not contribute to the plan. During the current year, the employer pays $4,000 into the plan on behalf of Fanny. The plan also earns $3,000 during the year on the balance in Fanny’s retirement account. Which of the following statements is true?
I.Fanny is not taxed on the $4,000 in the current year.II.Fanny is not taxed on the $3,000 in the current year.?
A. Only statement I is correct.
B. Only statement II is correct.
C. Both statements are correct.
D. Neither statement is correct.
Answer: C
Business
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