Asked by Jasmin Castaneda on Jul 20, 2024
Verified
Jennifer's employer withholds $1,500 of her pre-tax wages in a plan that Jennifer can use to pay for unreimbursed medical expenses,childcare,and parental care.What is this plan called?
A) Individual retirement account
B) Flexible spending account
C) Deferred compensation plan
D) Medical spending account
Flexible Spending Account
A Flexible Spending Account (FSA) is a tax-advantaged account that allows employees to set aside pre-tax dollars for eligible healthcare and dependent care expenses.
Pre-tax Wages
Earnings of an individual before any taxes are deducted.
Unreimbursed Medical Expenses
Health-related costs that are not covered or compensated by insurance or other means.
- Analyze the structure and purpose of different types of savings and spending accounts, such as Flexible Spending Accounts.
Verified Answer
LK
LongLive KingDueceJul 20, 2024
Final Answer :
B
Explanation :
The plan described is a flexible spending account, which allows employees to contribute pre-tax dollars towards eligible expenses such as medical expenses, childcare, and dependent care.
Learning Objectives
- Analyze the structure and purpose of different types of savings and spending accounts, such as Flexible Spending Accounts.