Question

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years. The corporation has a qualified retirement plan and contributes $2,000 during 2018 for Ursula. In 2018, how should Ursula treat the $2,000 contribution made on her behalf by the corporation?

Answer 1

Answer:

Ursula is not required to include in her current gross income the $2,000 that Ficus contributes to her retirement plan nor the interests that the plan generates.

Only when Ursula starts to withdraw money from her retirement account will she need to pay taxes for it.